Ownership Structure and the Performance of Chinese Listed Firms after the Share Reform : Latest Evidence from the Manufacturing Sector

The research investigates the relationship between ownership structure and the financial performance of Chinese manufacturing firms after the implementation of the 2005 reform of tradable and non-tradable shares. Using data from 2011 to 2014 and hand-collected ownership information, the results highlight that ownership concentration and the level of legal person shareholdings have a positive effect on firm performance. They also indicate that the level of state and individual investor shareholdings do not improve company performance. The relationship between the level of state and legal person shareholdings and firm performance is not linear and, in the simultaneous presence of these two ownership types, the dominance of one of the two drives the overall effect. The paper also shows that the 2005 reform has increased ownership dispersion but has not changed the relationship between the type of dominant shareholder and firm performance highlighted in earlier studies. It suggests that reforms can be ineffective if they do not also encompass a revision of the legal framework in a country