Ownership distribution and firm performance in China's transitional economy.

Abstract

A Chinese company may issue five different types of shares: state shares, legal person shares, employee shares, public or A-shares and foreign or B-shares. This thesis empirically examines the relation between firm performance and ownership distribution, especially the state and the legal person ownership. The panel data method is conducted with a sample of all listed firms in China over the period from 1994 to 1997. The pooled regression results show that the state ownership has a positive and significant impact on firm performance whereas the impact of the legal person ownership is different depending on the fixed effect specification, suggesting that the state is the most effective monitor of the managers of listed firms. I find that the foreign ownership has a negative impact on firm performance. The results also indicate that the impact of ownership distribution on firm performance is different across low-growth and high-growth firms, but there is no evidence that debt plays different roles across low-growth and highgrowth firms.