| Summary: | 博士 === 國立成功大學 === 會計學系碩博士班 === 95 === Within a relatively short time, with an average annual economic growth of around 9 percent, China has become the largest and fastest-growing emerging economy in the world. Since moving away from the former centrally planned economy to market economy, most listed companies were transformed from SOEs. The resulting institutional transformation is characterized by the emergency of highly concentrated ownership and state-owned shares, which may exert influence on corporate finance. Majority control gives the state shareholder incentive to control over firms’ important financial policies, like dividend payouts and seasoned equity offerings. This thesis includes two studies on the impact of ownership structure on financial policies in China’s privatized firms.
The first article investigates the relation between ownership structure and dividend preference. We first examine the relation between ownership structure and cash dividend preference by using a large sample of China's privatized firms; we then reexamine the same relation in the case of firms with different levels of growth opportunities. We find that the positive relation between state ownership and cash dividend preference only in firms facing lower levels of investment opportunity. On the other hand, the higher the ratio of employee and tradable shares, the lower the cash dividend to total dividend. To validate this result, we additionally test the effect of dividend preference and ownership structure on capital investment and whether the sensitivity of capital investment to investment opportunities varies with cash dividend preference. The empirical evidence consistently supports our argument.
The second article examines state shareholders’ rights subscription behavior and post-RO performance in China. We investigate the effect of large shareholders on SEO rights offerings in China’s emerging market. In addition, we examine whether the post-RO underperformance documented in the United States and other developed markets also applies to a transition economy with central planning such as China. We find that with higher ratio of state-owned shares, large shareholders tend to give up all preemptive rights for new shares of stock. Likewise, evidence confirms a predicted positive relation between large shareholders’ full rights subscription behavior and post-RO operating performance. Firms with partial subscription by large shareholders tend to underperform than those with full subscription. Post-RO performance is worse for firms with ROE that are close to meet the critical value.
This thesis examine the impact of ownership structure on dividend preference and large shareholders’ rights offering subscription behavior and post-RO performance, which provides a fuller explanation of dividend preference and rights issuing behavior in China and has implications for transitional economies. We not only demonstrate the impact of ownership structure on financial policies, but we also contribute a growing body of research evidence corroborating the claim that concentrated ownership causes the expropriation of minority shareholders by the controlling owners (La Porta et al., 2000; Claessens et al.,2000).
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