Ultimate Control Right and Firm's Total Factor Productivity: An Empirical Research of Chinese Listed Companies

We use the panel data of Chinese listed companies from 2003 to 2007 to study the relationship between ultimate control right and firm's total productivity. On the foundation of calculating the ultimate control rights of Chinese listed companies, total factor productivity is introduced as an indicator of firm's performance and a fix effect model is established. We estimate the model according to industries and examine the impact of ultimate control rights on performances of listed companies in different industries. The result shows that an inverse U-curve relationship exists between ultimate control right and firm's total factor productivity as a whole. When ultimate control right is at a relatively low level, it is positively related to total factor productivity. However, it is negatively related to total factor productivity while at a relatively high level.