The Influence Of Dual Ownership Structure On Enterprise Performance Under Incentive And Constraint Mechanism

Ownership structure can be called the cornerstone of an enterprise.It affects the operation and development of the enterprise and has a vital impact on the performance of the enterprise.Therefore,setting a scientific and reasonable equity structure is the first step for an enterprise to succeed.The same share and same rights structure is the mainstream of the equity structure of Chinese enterprises,and even a few years ago it was the only equity structure.However,the needs of the development of the domestic market economy and the emergence of technology-based enterprises have challenged the domestic same-share and equal-rights system.This system has hindered the operation of enterprises to a certain extent,and enterprises have begun to seek diversification of shareholding structures.The founders of technology-based companies have hard-to-replace human capital.The founders of these companies want to maintain control while constantly raising capital,so a dual equity structure is created.Although dual equity breaks the traditional principle of equity equality,it fulfills the needs of different shareholders caused by shareholder heterogeneity and effectively resolves the contradiction between equity financing and the maintenance of control rights.Different countries and regions have different levels of acceptance of dual equity.Foreign markets have a relatively high degree of acceptance of the equity structure,while my country’s capital market has not accepted the equity structure because of its incomplete development.However,after high-quality companies such as JD.com,Baidu,and Alibaba used dual equity to list abroad,and learned that domestic technology companies waiting to be listed have a desire for dual equity,the domestic capital market has gradually paid attention to dual equity.After many studies and discussions,the Hong Kong Stock Exchange of China issued a new "Listing Rules" in April 2018,breaking the rule that domestic companies do not allow dual equity listings.On July 8,2018,Xiaomi Group became the first domestic company to successfully list in Hong Kong using dual equity.This paper is based on the incentive and constraint mechanism to discuss the impact of dual ownership structure on corporate performance.This paper first describes the policy and industry background and research significance,and then introduces the concepts related to this paper.The human capital theory,principal-agent theory and information asymmetry theory are elaborated to lay a solid foundation for the following.This paper reviews the domestic and foreign literature on the motivation of dual-class ownership,its rationality,advantages and disadvantages,as well as its impact on enterprise performance.The paper also analyzes the influence mechanism of dual-class ownership on performance from four perspectives:incentive and constraint mechanism,stimulating professional human capital of founders,promoting enterprise innovation and improving operational decision-making efficiency.Then with the examples of millet group listed successfully introduced the design characteristics of the dual share of the millet and using the equity structure,using the financial performance indicators and the non-financial performance indicators analysis of millet 2016-June 2020 the performance of the longitudinal variation,ROE,EVA and tobin Q value lateral comparison analysis of millet and the performance of lenovo group,the relationship of the dual ownership structure and corporate performance.Then it draws a conclusion through the case and concludes that the dual ownership structure is conducive to corporate performance and long-term development,and is the result of Xiaomi’s strategic choice.Finally,this paper puts forward some suggestions on the use of dual-class share in the capital market based on the case,and thinks that it is necessary to clarify the application conditions of dual-class share structure,strengthen the protection of small and medium investors,pay attention to the improvement of management ability and strengthen the supervision mechanism.At present,Hong Kong has just allowed dual-class share system to be listed,and Xiaomi is the first case of the implementation of this provision.Therefore,an in-depth analysis of the design characteristics and performance impact of Xiaomi dual-class share system can provide certain data support and reference for domestic enterprises that have the same idea of adopting dual-class share system to be listed.