The Influence of Ownership Structure of the Greater China Listed Insurance Companies on Corporate Performance

With the development of the insurance market, competition among the insurance companies increases fiercely. The competition of the insurance companies is reflected in many aspects, the core of which is the modern insurance company's governance mechanism. Ownership structure is regarded as the basis of corporate governance. It fundamentally determines the company's decision-making mechanism as well as incentive and restraint mechanism, which ultimately influence the company's behavior and business performance. Therefore, ownership structure has an important impact on its business performance. Comparing to previous researches about insurance company ownership structure and corporate performance, our research has the following innovative points: Firstly, from the perspective of the Greater China region, we choose our investigated subjects from the Chinese mainland; Hong Kong SAR and Taiwan, China's insurance companies and we collect the annual panel data from 2010 to 2015. Therefore, the research results would be more inclusive. Secondly, we use fifteen indicators to measure the performance of listed insurance companies through statistical methods. In this case, we overcome the possible bias of previous studies which use the stock price changes to measure the performance of the company. Thirdly, in terms of the explanatory variables, we analyze the influence on the corporate performance from the following two aspects: the ownership structure and the board structure. This paper is mainly divided into four parts: the first part is a literature review, analysis and summary of the relevant research results. The second part is the data source and theoretical research. In order to ensure a more accurate measurement of business performance, we collected 15 indicators, such as net assets income rate, capital utilization rate and so on. Through the factor analysis method, we propose five dimensions of the insurance company performance evaluation index, which are profitability, capital management, managing ability, risk management ability and development potential. The third part is empirical research. This paper uses the panel data to analysis the influence of ownership structure on corporate performance. The results are as following: Firstly, two variables, the biggest shareholder's equity ratio and corporate performance, have a positive relation, significant at 1% level. The ratio of former five shareholders' shareholding and the ratio of the first major shareholder holding shares and the sum of the second to fifth major shareholders holding shares have a negative correlation with operating performance, significant at 1% level. It indicates that the concentration of power and the fixed large shareholders play a positive role in the sustainable management of the enterprise, and will give the investors a positive suggestion. Equity balance of the company's governance plays a positive role; the more decentralized equity distribution is more conducive to the company's business. The type of actual controller and business performance has a positive relation, significant at 1% level. This result may be interpreted as the insurers who are controlled by government have better resources in China and it cause that the governance of State-owned insurance company is better than private insurance companies. The proportion of Independent directors and operating performance has a positive relation, significant at 5% level. The impact of the executive stock ownership rate on the company's business is not significant. The reason may be the sample size is not large enough. However, it can reflect the current status of China's insurance companies from on the other hand, hat is to say, due to the imperfection of the reward and punishment system, the impact of the executive stock ownership rate on the company's business can be ignored. In the last part, we analyze the results of empirical research, and put forward some concrete suggestions on how to establish a more reasonable equity structure.