Tel: +44 (0)20 7882 8570
Location: Mile End, Bancroft Building
1st Supervisor: Professor Gulnur Muradoglu
2nd Supervisor: Dr. Deven Bathia
"Ownership Structure and Firm Performance: An Empirical Analysis of Listed Companies in China"
The relationships between ownership structure and firm performance in publicly listed companies are important concerns for decision-makers who are aiming to maximize firm performance. The existence of information asymmetry and the divergence of interests between the owners (principals) and managers (agents) results in the problems that adversely affect corporate performance and it has been proposed that the main reasons for agency problems are the different ownership structure and different roles people have in organisations.
China provides an outstanding platform to study the relation between ownership structure and firm performance. In recent decades, the Chinese government has undertaken a series of significant reforms to liberalize Chinese stock markets and incentivize the development of different types of investors. Given the importance of the ownership structure’s effect on firm performance, the analysis of the re-structured ownership in listed companies could help the managers especially the decision makers better understand the ownership-performance relations. However, previous studies examining the relation between ownership structure and firm performance in China have shortcomings as they fail to correctly identify and distinguish among the different types of owners. Moreover, the global financial crisis in 2007 is a sudden and unpredictable event; it is extremely difficult for firms to adjust their optimal corporate governance structures in response to a future financial crisis. The global financial crisis may have induced the blockholder to forgo the short-term political incentives of diverting substantial resources, or make unusual decision to avoid the shock from the financial storm which may result in unexpected firm performance. Most studies of Chinese companies are obsolete and did not estimate the ownership-performance relations under different economic conditions such as the financial crisis in 2007. This study aims at accurately identifying and differentiating the ownership structure in China's listed companies, providing a comprehensive analysis on the relation between ownership structure and firm performance and capturing three stages of economic condition: pre-crisis, during-crisis and post-crisis to investigate the effect of severe financial constraints.