Ownership Structure and Firm Performance: An Empirical Analysis of the Listed Firms in China

Abstract

The thesis aims to investigate the relationship between the ownership structure and listed firms' performance in the Chinese business group. In this thesis, I firstly contribute to the ownership structure literature by hand-collecting the ownership data and developing a new ownership classification in the listed firms of China. Secondly, I contribute to the corporate finance literature by providing the analysis of the relationship between ownership structure and various firm performances. Thirdly, I contribute to the literature on the business group by providing an empirical analysis of ownership and performance outcomes and contribute to the agency theory literature by showing the agency conflicts between the ultimate controlling shareholders and minority shareholders. The sample in the thesis includes 3,077 firms and 27,077 firm-year observations over the period from 2003 to 2016. To systematically connect the relationship between ownership and performance outcomes with structural characteristics of business groups, I investigate the effects of ownership structure on firm performance from three angles: the types of ultimate controllers, direct controlling ownership and administrative levels and functions of state ultimate control. The results in the thesis present that with the support of the government, the listed firms controlled by Central State-owned Assets Supervision and Administration Commission (SASAC) and Asset Bureau have higher firm outputs than others. Few of largest shareholders in the state-owned enterprises have a significant impact on firm performance. The SASAC and high administrative-level governmental agencies as ultimate controllers positively impact firm output. The state controllers at Central or Municipal levels have positive impacts on firm employment. From the findings of this thesis, the policymakers could know privatisations decline the employment and output of large state-owned listed firms. The investors should give great attention to the state-owned listed firms since the largest shareholders cannot decide the development direction of the firms and must follow the instruction from the ultimate controllers.