Impact of Managerial Ownership on Firm Performance: Evidence from China’s A-Share Market in difference of private enterprises and SOEs

Zihan Zhang ()
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Zihan Zhang: SUSTECH College of Business, Southern University of Science and Technology

A chapter in Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024), 2025, pp 252-261 from Springer

Abstract: Abstract This paper is research the impact of managerial ownership on firm performance according to analysis private enterprises and SOEs from China’s A-Share market. Based on China’s special socialist background, the managerial ownership and management mode have significant difference. Compared to government-controlled structure of state-owned enterprises, private enterprises’ share structure is more diverse, and ownership changes flexible (such as mergers and acquisitions, etc.). Managerial shareholding can promote the consistency of management and shareholders’ goals through the theory of interest consistency, so as to improve firm performance. The study use pearson correlation and OLS regression model to examine the connection between company performance and management ownership, which is meanly measured by return of assets (ROA). The control variables include firm size, leverage ratio, working capital and industry growth rate. The results show that managerial shareholding in private enterprises, has a favorable impact on business performance while in state-owned enterprises, the incentive mechanism of managerial shareholding is not obvious, and may even have a negative impact. This study will provide reference for firm governance policy and management incentive design in the future. But also pointed out some shortcomings, it includes the neglect of other incentive forms (time option, long-term incentive plan, etc.), and insufficient control of potential variables such as macroeconomic factors and industry competition. Future research can further explore the impact of different management incentive forms on firm performance.

Keywords: OSL; Private enterprises; SOEs; ROA (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-652-9_26

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DOI: 10.2991/978-94-6463-652-9_26

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