The Effect of Multiple Large Shareholders on the Firm's Value in China

Abstract

This paper examines the effect of the multiple large shareholders (MLS) on the value of the firm. It also studies will the ownership gap between the major shareholders have an impact on the firm's value. The sample includes data of Chinese listed firms from 2008 to 2017. Our results show that the existence of MLS increases the firm’s value. In particular, the ownership gap between multiple major shareholders is negatively related to the value of the firm. Because the smaller the gap, the greater the monitoring effect of the second shareholder on the first shareholder. And finally the split share structure reform affects the empirical results of almost all Chinese stock markets, so we study the influence of the split share structure reform, and the results show that the impact of the split share structure reform is considered to weaken the monitoring effect of the second shareholder on the first shareholder. Keywords—multiple large shareholders; firm value; split share structure reform