Ownership Concentration, Identity and Firm Performance: Evidence from China’s Listed Firms

ABSTRACT

Ownership concentration and ownership identity are important corporate governance mechanisms. This paper seeks to understand how ownership concentration and identity affect firm performance in an important emerging economy-China. It hypothesizes that differences in firm performance are a result of various ownership structures and ownership identity. Using data of Chinese listed companies from 2007–2017, it tests those hypotheses and finds that ownership concentration has a positive effect in firm performance and corporate ownership leads to higher firm performance than financial ownership. The study shows that firms in China benefit more from foreign ownership than firms with only domestic ownership.

KEY WORDS:

• agency theory
• firm performance
• M&A
• ownership concentration
• ownership identity

Notes

1. We test and find that CR3 (CR5) is not correlated with HHI.

Additional information

Funding

The principal author’s research was funded by the National Natural Science Fund of China with Grant No. 71573177 and Grant No. 71603206, and Humanities & Social Sciences research projects of Ministry of Education with Grant No. 17YJA630121.