Abstracts

Performance of Chinese listed companies with respect to ownership structure, concentration and CEO characteristics

by Che Yin Tsui




Institution: University of Newcastle
Department:
Year: 2015
Keywords: Chinese companies; ownership structure; CEO characteristics
Record ID: 1033846
Full text PDF: http://hdl.handle.net/1959.13/1059182


Abstract

Professional Doctorate - Doctor of Business Administration (DBA) In this dissertation, I aim to examine the performance of Chinese listed companies with respect to ownership structure, ownership concentration and CEO characteristics. This research study differs from previous studies in two major aspects. Firstly, it is not entirely based on the agency theory. For example, the socialized approach assumes that there is a positive relationship between state ownership and agency cost (Chizema and Le, 2011). Therefore, a negative relationship exists between the performance of a firm and its ownership by the state (Saunders and Travlos, 1990). In contrast, it can be argued that state ownership has a positive impact on the performance of a firm (Chizema and Le, 2011). As privatization in China is not in the strict institutional context, the state may still interfere with the firm in a subjective manner (Bachiller, 2009). Secondly, it explains the relationship between the performance of a firm (accounting returns) and the value of a firm (return based on market), proposing an effect that moderates the state ownership. It is argued that state ownership has a positive effect on the performance of a firm, and a negative effect on the market value of a firm. Ownership concentration is also found to have an impact on a firm’s performance. In the context of China the background of the ownership may also have an impact on firm performance. Concentration of ownership in the hands of the state may have a different effect on firm performance than ownership concentration by institutions or private individuals. As the Chinese economy continues to develop and transition from a centrally planned one to a market based one, corporatization also goes along. Government interference on day to day management of government companies gradually subsides. The reliance on professional management also increases with the power of the CEO getting stronger. This research study aims to study the effect of CEO characteristics on firm performance as it relates to China. The impact of CEO characteristics is worth further study as the focus of corporate governance at Chinese listed firms gradually evolves from being dictated by ownership structure and concentration to more involvement of the CEO. This research study aims to answer the following research questions. 1. Is the ownership stricture significantly associated with the performance of Chinese listed companies? 2. Is the ownership concentration significantly associated with the performance of Chinese listed companies? 3. Are the CEO characteristics significantly associated with performance of Chinese listed companies? Regression analysis has been used to test the hypotheses that are established based on these research questions. Research data adopted are based on all listed firms on the Shanghai and Shenzhen Exchanges that have issued “A” shares and been consistently trading for the period from 2010 to 2012. Quantitative analysis returns a conclusion that there exists a positive impact on the…