FIRM PERFORMANCE AND THE OWNERSHIP OF THE LARGEST SHAREHOLDER

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Xiaoyue Chen, Jeong-Bon Kim ORCID logo, Steven Shuye Wang, Xiaodong Xu

https://doi.org/10.22495/cocv4i3p11

Abstract

We examine the relationship between cash-flow rights held by the largest shareholders and firm performance in Chinese capital market. Using a sample of all listed A-share firms between 2000 and 2003, we find that there are “region effects” with an “M” shape in the relationship between cash flow rights held by the largest shareholder and firm performance. The non-monotonic variations of firm performance associated with changes of the largest shareholdings suggest that there may be an optimal ownership structure existed in listed Chinese firms. We also find that firms under the control of largest state shareholders have poorer performance than that under the control of largest non-state shareholders.

Keywords: The Largest Shareholder, Ownership Structure, Corporate Governance, Firm Performance

How to cite this paper: Chen, X., Kim, J.-B., Wang, S. S., & Xu, X. (2007). Firm performance and the ownership of the largest shareholder. Corporate Ownership & Control, 4(3), 126-138. https://doi.org/10.22495/cocv4i3p11