Ownership structure, corporate governance, and corporate performance : the case of Chinese stock companies
The authors investigate whether ownership structure significantly affects the performance of publicly listed firms in China and if so, in what way. With publicly listed stocks, one can quantify the ownership mix and concentration, which makes it possible to study this issue. The authors use the recent literature on the role of large institutional shareholders in corporate governance as a theoretical base. A typical listed stock company in China has a mixed ownership structure, with three predominant groups of shareholders -the state, legal persons (institutions), and individuals- each holding about 30 percent of the stock. (Employees and foreign investors together hold less than 10 percent.) Ownership is heavily concentrated: the five largest shareholders accounted for 58 percent of outstanding shares in 1995, compared with 57.8 percent in the Czech Republic, 42 percent in Germany, and 33 percent in Japan. Their empirical analysis shows that the mix and concentration of stock ownership do indeed significantly affect a company's performamce: there is a positive, significant correlation between concentration of ownership and profitability; the effect of concentrated ownership is greater with companies dominated by institutions than with those dominated by state; the firms'profitability is positively correlated with the fraction of legal person (institutional) shares; it is either negatively correlated or uncorrelated with the fraction of state shares and with tradable A-shares held mostly by individuals. Labor productivity tends to decline as the proportion of state shares increases.
|Date of creation:||30 Jun 1997|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin, Kenneth J & McConnell, John J, 1991. " Corporate Performance, Corporate Takeovers, and Management Turnover," Journal of Finance, American Finance Association, vol. 46(2), pages 671-87, June.
- Douglas Kruse & Joseph Blasi, 1995. "Employee Ownership, Employee Attitudes, and Firm Performance," NBER Working Papers 5277, National Bureau of Economic Research, Inc.
- Bailey, Warren & Jagtiani, Julapa, 1994. "Foreign ownership restrictions and stock prices in the Thai capital market," Journal of Financial Economics, Elsevier, vol. 36(1), pages 57-87, August.
- Gorton, Gary & Schmid, Frank A., 2000.
"Universal banking and the performance of German firms,"
Journal of Financial Economics,
Elsevier, vol. 58(1-2), pages 29-80.
- Gary Gorton & Frank A. Schmid, 1996. "Universal Banking and the Performance of German Firms," NBER Working Papers 5453, National Bureau of Economic Research, Inc.
- Groves, Theodore, et al, 1994. "Autonomy and Incentives in Chinese State Enterprises," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 183-209, February.
- Claessens, Stijn, 1995.
"Corporate governance and equity prices : evidence from the Czech and Slovak Republics,"
Policy Research Working Paper Series
1427, The World Bank.
- Claessens, Stijn, 1997. " Corporate Governance and Equity Prices: Evidence from the Czech and Slovak Republics," Journal of Finance, American Finance Association, vol. 52(4), pages 1641-58, September.
- Holmstrom, Bengt & Tirole, Jean, 1993. "Market Liquidity and Performance Monitoring," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 678-709, August.
- Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
- Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
- Claessens, Stijn & Djankov, Simeon & Pohl, Gerhard, 1997.
"Ownership and corporate governance : evidence from the Czech Republic,"
Policy Research Working Paper Series
1737, The World Bank.
- Stijn Claesens & Simeon Djankov & Gerhard Pohl, 1997. "Ownership and Corporate Governance : Evidence from the Czech Republic," World Bank Other Operational Studies 11584, The World Bank.
- Andrei Shleifer & Robert W. Vishny, 1996.
"A Survey of Corporate Governance,"
NBER Working Papers
5554, National Bureau of Economic Research, Inc.
- Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
- Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-52, June.
- A. Admati & P. Pßeiderer & J. Zechner, 2005.
"Large shareholder activism, risk sharing, and financial market equilibrium,"
- Admati, Anat R & Pfleiderer, Paul & Zechner, Josef, 1994. "Large Shareholder Activism, Risk Sharing, and Financial Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1097-1130, December.
- Zou, Liang, 1992. "Ownership structure and efficiency: An incentive mechanism approach," Journal of Comparative Economics, Elsevier, vol. 16(3), pages 399-431, September.
- McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
- Shleifer, Andrei & Vishny, Robert W, 1986.
"Large Shareholders and Corporate Control,"
Journal of Political Economy,
University of Chicago Press, vol. 94(3), pages 461-88, June.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- Stiglitz, Joseph E, 1985. "Credit Markets and the Control of Capital," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(2), pages 133-52, May.
- Sanford J. Grossman & Oliver D. Hart, 1980. "Takeover Bids, the Free-Rider Problem, and the Theory of the Corporation," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 42-64, Spring.
- Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
- Groves, Theodore & Yongmiao Hong & John McMillan & Barry Naughton, 1995. "China's Evolving Managerial Labor Market," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 873-92, August.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1794. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.