Empirical Study On The Factors Affecting The Profitability Of Listed Securities Companies In China

Since the establishment of Shenzhen Special Economic Zone Securities Company,the first securities company in China,in September 1987,China’s securities industry has gone through more than 30 years of development.By the end of the second quarter of 2018,there are 131 securities companies in China(hereinafter referred to as securities firms).The total assets of 131 securities firms are 6.38 trillion yuan,the net assets are 1.86 trillion yuan and the net capital is 1.56 trillion yuan.The securities market has become an important part of China’s financial market and has made great contributions to the development of the real economy.Its profitability has maintained its profitability in China’s financial market.Steady development and optimization of resource allocation have played an indispensable role.Based on the statistics of the profitability of 31 domestic listed securities firms in the past three years,this paper finds that there is a huge gap between the profitability of national securities firms and that of regional securities firms.Four common profitability indicators: ROA,ROE,EPS and NPR all show that the profitability of national securities firms is significantly greater than that of regional securities firms,and the profit gap shows an increasing trend year by year.It is very important for the survival,development of securities firms to find out the influencing factors,and their mechanism of action that affect the profitability of listed securities firms at this stage.Based on the research of domestic and foreign scholars,this paper summarizes and combs the factors that may affect the profitability of listed securities firms in China,and explores the mechanism of these factors at the theoretical level.The main influencing factors include total assets,net capital,financial leverage,ownership structure,income structure,geographical location,rating ranking and macroeconomic environment.Then,the research sample is divided into national and regional securities firms,introducing the operating status and profit gap of these two types of securities firms respectively,and dividing the sample period into two groups(2007-2012 and 2013-2018).The influence differences of influencing factors on different types of securities firms and the change of influence over time are discussed respectively.Based on theoretical analysis,4 kinds of securities firms are given.In order to find the key factors affecting the profitability of listed securities firms,especially regional securities firms.Finally,using the semi-annual operating data and financial data of 31 domestic listed securities firms from 2007 to 2018,the principal component analysis method is used to extract the comprehensive indicators representing the profitability of listed securities firms.The empirical tests of the fixed-effect model and the random-effect model for the possible influencing factors of the above theoretical analysis prove that hypothesis 1,2 and 4 are valid and hypothesis 3 is not valid.Specific conclusions are as follows: Firstly,in terms of scale effect,the profitability of national and regional securities firms is enhanced with the expansion of asset scale,which is particularly significant for regional securities firms,but the influence of scale factor on the profitability of securities firms is gradually weakening;secondly,in terms of financial leverage,the profitability of national securities firms is positively correlated with financial leverage.The profitability of regional securities firms is negatively correlated with financial leverage.With the passage of time,the factor of financial leverage is no longer significant to the profitability of securities firms.In addition,in terms of income structure,the increase of the proportion of national securities firms and regional securities firms’ income in traditional business can significantly improve the profitability of securities firms,which is more applicable to national securities firms.Later,with the decentralization of ownership structure,the profitability of national and regional securities firms is enhanced.This conclusion is more obvious for regional securities firms,and the influence of ownership structure factors on the profitability of securities firms is gradually increasing.For national securities firms,the scale of assets can be increased by issuing preferred shares and financial bonds,which will enhance their profitability to a certain extent.In addition,at this stage,increasing the proportion of traditional business such as securities brokerage business and securities investment business in total income can maintain the stable development of profitability in today’s increasingly volatile stock market.In the aspect of ownership structure,we should further increase the decentralization of ownership structure by means of additional issuance and high transfer,improve the supervision power of small and medium-sized shareholders,and solve the principal-agent problem.For regional securities firms,increasing asset size can significantly improve their profitability.Regional securities firms can increase their asset size by introducing strategic investors.Similarly,in today’s increasingly volatile stock market,to a certain extent,the development of traditional business of securities firms is conducive to the stability of the profitability of regional securities firms.In addition,reducing the concentration of ownership structure is also important to improve the profitability of regional securities firms.Regional securities firms can dilute state-owned shares and increase the share proportion of individual or institutional investors by increasing capital,expanding shares and transferring shares,which will significantly increase the profitability of regional securities firms.