VC/PE Shareholding, Shareholding Structure and Firm Performance: Illustrated by the Small and Medium-sized Enterprise Board
|Keywords||VC/PE shareholding concentration equity restriction firm performance|
The relationship between shareholding structure and firm performance has long been the central issue of corporate governance theory and practice. Studies in this field abroad started in the 1930s, and now have integrated into a relatively complete theoretical system. Domestic research papers on shareholding structure and performance relationship are of an increasing number in recent years. However, the basic mode of those researches is to adopt a certain aspect of a foreign theory in terms of corporate governance and testify its interpretive capacity in China without a coherent conclusion. There is deficiency in domestic empirical studies on certain types of listed companies’shareholding structure and performance relationship, especially in-depth ones.In recent years, with the rapid development of small and medium-sized enterprises in China, the partial enterprises have been constructed to be the new power to promote the domestic economic growth. However, due to the particularity of organization structures, corporate standards and business risks, the participation of VC and PE institutions is very important for the development of enterprises. Basing on the practical situation of our nation’s stock market, the paper adopts 859 sample data of 317 enterprises from 2008 to 2010 from the small and medium-sized enterprise board, taking the chief return on assets as a quantified measure of the company’s performance, the paper selected the following three independent variables:the shareholding ratio of VC/PE, the first majority shareholder’s shareholding proportion, and the ratio of the first majority shareholder’s shareholding proportion to the second majority shareholder’s shareholding proportion(Z index). Those three independent variables are respectively from the three aspects of VC/PE, ownership concentration and equity restriction. The controlled variables are the logarithm of total assets, net profit growth rate, the proportion of independent directors, the year of sample data and the industry. Then comprehensive analysis on the correlativity of VC/PE shareholding, shareholding structure and firm performance is conducted through the research on the following five aspects:the relationship between VC/PE and firm performance, between ownership concentration and firm performance, between equity restriction and firm performance, the influence of VC/PE shareholding on shareholding concentration and firm performance, and the influence of VC/PE shareholding on equity restriction and firm performance.Major findings includes:(1) Firm with VC/PE background have better performance than those without such background, and the VC/PE shareholding proportion is positively correlated with firm performance. (2)There is obvious positive correlation between shareholding concentration and firm performance. That is to say, the higher the first majority shareholder’s shareholding proportion is, the better performance the firm achieves. (3)There is no correlation between equity restriction and firm performance. (4)Shareholding concentration in companies with VC/PE background has a more notable positive correlation to performance than in companies with no VC/PE background. (5)The Z index in companies with VC/PE background has a more notable negative correlation to performance than in companies with no VC/PE background. In conclusion, based on the research results, this paper provides several strategic suggestions on the VC/PE shareholding and optimization of shareholding structure of domestic the small and medium-sized enterprise board of listed companies.