Ownership Structure, Corporate Governance and Company Performance in China

Using a sample of 276 China-listed companies from 1999 to 2002, this study finds that the relationship between state-owned shareholding and corporate performance is not U-shaped, or inverted U-shaped but is in effect non-linear (for the period concerned); when the proportion of state-owned share is relatively small, there is no negative correlation. However, when the proportion is above 50 per cent, state-owned shareholdings have significantly negative impacts on company performance. It is also found that when non-state-owned shareholdings are relatively small, they have a significantly positive effect on company performance. In addition, major corporate governance measures, such as the proportion of independent directors and independent supervisory directors, size of board, managers' incentives and audit committee, have no significant effect on a firm's performance.