Research on the Effect of Ownership Structure on Corporate Financial Risk: Based on the Empirical Evidences of Chinese A-share Listed Companies in Manufacturing Industry

Abstract

Based on the new research design and samples from the A-share listed companies of Chinese manufacturing industry during the period from 2005 to 2009, an empirical research is done in this paper to give an analysis of the effect of ownership structure on corporate financial risk. In the empirical research, it is indicated that the financial risk of the state-owned enterprises is higher than that of the non-state-owned enterprises, and that the share proportion of the largest shareholder has no significant effect on corporate financial risk in the state-owned enterprises, while in the non-state-owned enterprises, the higher the share proportion of the largest shareholder, the higher the corporate financial risk. And it is also indicated that the higher ownership concentration and equity restriction would bring the lower corporate financial risk. This research not only empirically reveals the effect of ownership structure on corporate financial risk, but also provides some new empirical evidences for Chinese listed companies which should give emphasis on optimizing the ownership structure on the purpose of decreasing the corporate financial risk.