Research on the Concentration of Equity Ownership in Chinese Listed Companies

Author: Lin Lefen
Publisher:
Publish Date: 2005-11-01
Features: Based on constructing a theoretical framework, this book takes the perspective of equity concentration and uses 1,059 listed companies from 18 industries in China as research samples to conduct empirical analysis on corporate governance issues, proposing corresponding recommendations. The book elaborates on the background, significance, research reviews of corporate governance issues both domestically and internationally, as well as the research methods and analytical framework of the book, which holds high value in this regard. The book has four innovative points:
First, possible innovations in research perspective and methodology, breaking through the traditional focus on equity attributes in equity structure, the use of single performance indicators, and the predominance of overall sample-based research. This book emphasizes equity concentration and equity balance in equity structure, selects 12 financial indicators for performance evaluation using factor analysis to derive a total performance score, and focuses on industry-specific research across 18 industries. Its advantage lies in revealing the multi-dimensional industry characteristics and patterns of listed companies, facilitating the establishment of diversified corporate governance mechanisms suitable for different industries.
Second, the use of actual data through empirical analysis confirms that the average performance of listed companies in monopolistic industries in China is better than that in competitive industries, emerging industries show a positive growth trend, and the average performance of listed companies in the heavy chemical industry is better than that in the light industry, indicating the arrival of China's new heavy chemical era.
Third, the use of economic models validates that the prominent feature of equity structure in Chinese listed companies is the relative concentration of equity among major shareholders, with high concentration among the top five shareholders. In industries with a higher proportion of monopoly and emerging industries, relative equity concentration is relatively close to complete competition, while traditional industries with appropriate equity dispersion may benefit performance improvement. Although the degree of influence of equity concentration on performance varies significantly across 18 industries, it generally exhibits an inverted U-shaped pattern of first increasing and then decreasing.
Fourth, through empirical analysis and the use of economic models, the book examines that under conditions of relative equity concentration, equity balance not only correlates positively with the performance of listed companies in most industries but also helps suppress the of major shareholders' interests against other shareholders, especially minority shareholders. The equity balance mechanism is an effective approach for Chinese listed companies in a transitioning economy to improve their corporate governance mechanisms.