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The Relationship between Largest Shareholder’s Ownership and Firm Performance: Evidence from Mainland China

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The Relationship between Largest Shareholder’s Ownership and Firm Performance: Evidence from Mainland China

ding, shiyi (2013) The Relationship between Largest Shareholder’s Ownership and Firm Performance: Evidence from Mainland China. Masters thesis, Concordia University.

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Abstract

There is limited research on understanding the relation between concentrated ownership structure and firm performance in the Chinese market. In this paper, I analyze this relationship using data from the small firm and growth enterprise markets in China. I conduct several cross-sectional tests using Tobin’s q and ROA as measures of firm performance. I find a significant cubic relationship between Tobin’s q and the largest shareholder’s ownership level while unaffiliated block-holders consistently show a negative effect on firm value. My results show that firm value first declines when family ownership is between 0 and 25.9 percent, then rises in the 25.9-54.2 percent range, and again falls when family ownership is greater than 54.2 percent. Furthermore, I find a non-linear relation between ROA and the largest shareholder’s ownership level. I also examine the effect of firm age and industry. While firm age is not related to firm performance in general, a positive relation is found for older firms. Finally, significant results with profitability are found for firms in the service industry.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:ding, shiyi
Institution:Concordia University
Degree Name:M. Sc.
Program:Business Administration (Finance specialization)
Date:19 August 2013
ID Code:977781
Deposited By: SHIYI DING
Deposited On:26 Nov 2013 15:43
Last Modified:18 Jan 2018 17:45
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