An empirical study on the impact of non-tradable share reform on ownership structure and agency costs

Abstract

The purpose of this paper is to examine the impact of non-tradable share reform on ownership structure and the influencing path on equity agency costs in depth. Data from listed companies is used to analyse the changes of relationships between ownership structure and equity agency costs after non-tradable share reform. The result of the research shows non-tradable share reform has a distinct impact on agency costs. After non-tradable share reform, the correlation of ownership concentration and Type I agency costs becomes significantly negative, and the negative relation with Type II agency costs is enhanced. Furthermore, the relations between equity restriction and two types of agency costs shift from non-correlations to significantly positive ones. The link between proportion of public shares and Type I agency costs shifts from non-correlation to significantly positive correlation while the positive correlation with Type II agency costs is strengthened. The negative correlations among institutional investors and two types of agency costs are strengthened.