The Relationship between Ownership and Company Performance: Evidence from Chinese Company-Level Data
Abstract: For Chinese economy, the relationship between ownership and company performance is an important theoretical and practical topic. My research question is how ownership affect company performance and what is the basis determinant. In the view of macro, it relates to whether the economy system need further reform or not and if the economy could remain a sustainable growth. In the view of micro, it relates to the development of a company. There are two diametrically opposed views on this issue among economists, one includes property right theory and public choice theory while the other includes competition theory and shareholding structure irrelevance theory. There are two reasons why the conclusions are not consistent. Firstly, the theoretical basis and empirical research is not sufficient; secondly, the discrepancy of analysis indices selected is difficult to summarize the interaction of many factors and the special Chinese conditions. In this paper, we test whether ownership dose have significant impact on company performance after analysis, integrating and empirical study. Moreover we finally found that whether the property right is clear would be the root cause of which ownership affecting company performance dramatically. That is to say the company which has a clear property right system enjoys more profitability than others have not.
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