An Empirical Study On The Relationship Between Ownership Structure And Agency Cost

The agency costs include the first type of agency cost caused by the conflict of interest between the shareholders and the management,the second type of agency cost caused by the conflict of interest between the large shareholders and the minority shareholders.The ownership structure is an important factor affecting the two types of agency costs.At present,the ownership structure of China's state-owned companies generally presents a situation of high ownership concentration,low ownership balance,and low proportion of managerial ownership.Taking the state-owned listed companies in 2017 as an example,the average ownership concentration is 39.43%.The second to the tenth largest shareholders hold an average of only 65.58% of the first largest shareholder.The state-owned listed companies with zero managerial ownership account for 43.96% of all state-owned listed companies.This ownership structure cause high agency costs for state-owned listed companies.The significance of this thesis is to provide some suggestions for state-owned companies to improve their ownership structure and reduce agency costs.Based on the empirical data of China's state-owned listed companies,this thesis uses a multivariable linear regression model to study the relationship between ownership concentration,ownership balance,managerial ownership and the two types of agency costs.The conclusions are as follows: The relationship between ownership concentration and the first type of agency cost of state-owned enterprises is significantly positive and the relationship between ownership concentration and the second type of agency cost of state-owned enterprises is significantly negative;The relationship between ownership balance and the first type of agency cost of state-owned enterprises is significantly positive and the relationship between ownership balance and the second type of agency cost of state-owned enterprises is significantly negative;there is no significant relationship between managerial ownership and the two types of agency cost.The suggestions are as follows: Firstly,state-owned enterprises should promote mixed ownership reform;Secondly,state-owned enterprises should promote employee ownership plans.The innovation of this thesis is that the first type of agency cost and the second type of agency cost are distinguished.In the past,most of the studies on agency costs are confined to the traditional agency theory,they consider that agency costs are only the first type of agency cost between shareholders and management,while ignoring the second type of agency cost between controlling shareholders and minority shareholders,which is not accurate enough.The inadequacy of this thesis is that the measurement of the two types of agency costs is not accurate.