An Empirical Analysis of the Relationship between the Managerial Ownership and Corporate Performance in China

This study conducts an empirical analysis on the relationship between managerial ownership and corporate performance in China. The objects are 2024 company-year observations from the listed companies traded on Shanghai and Shenzhen Stock Exchanges from 2014 to 2016 after suffering the economic recession in 2008. Initially, there is a linear relationship with positive coefficient between managerial ownership and corporate performance at low level of ownership in China. Moreover, when controlling the time dummies, an inverted U-Shaped relationship is found, which is consistent with Defense Theory (Chen, 2001). It suggests there is an increase of firm value as the increase of managerial ownership at the low level of ownership but a decrease of firm value as the increase of managerial ownership at the high level of ownership. Furthermore, the firm-fixed effects are added in the model, but most variables turn to be insignificant.