Management of Capital Availability on Shareholding Ratio and Business Performance

Abstract

Demand of business performance enlargement is expeditiously increasing and its achievement is an important concern in the contemplation of management capability and domestic enterprises. Corporate governance mechanism is a big controversy to this concern and it became a conventional research in every country and their relation with executive is different due to the law and proprietary structure. In this article, executive’ shareholding impact on business performance is evaluated in order to analyze the executive ownership concentration and their relationship with business performance. Moreover, analysis is performed using theoretical and empirical method to control over business performance. First, theoretical method is considered to analyze co-relationship between executive and corporate performance and its significance to the business performance. Second, empirical method evolved with underlying measurement models and evaluated using regression analysis and robustness test. We collected the data of Chinese listed companies (partitioned into state and non-state owned companies) in the year from 2014 to 2016. Empirical results could find a positive correlation between executive and corporate performance as well as validating the improvised hypothesis. We also found that executive ownership could guide and impel the management to alienate the interests of executives’ shareholding ratio in order to shorten the interim behavior of senior executives. Our findings provide more insights on executive ownership to expedite business performance management by straightening the interests of executives.