Does ownership structure affect performance? Evidence from Chinese mutual funds

Abstract

This paper examines the impact of ownership structure on Chinese mutual fund performance and market share. We focus on two dimensions of ownership structure, namely the background of the owners and the degree of ownership concentration. Using a hand-collected dataset comprising 731 observations for 94 fund management companies over the period from 2005 to 2015, we provide evidence with panel estimation shows that the government ownership ratio and government-controlled companies have a positive effect on funds' performance. On the other hand, foreign ownership has a negative impact on performance and market share. Having a higher ownership concentration is more likely to increase the company's market share, whereas government-controlled companies experience a negative impact on their market share.

Mutual fund activism and corporate innovation: Evidence from China

“…For instance, Yuan et al (2008) documented that the total net asset (TNA) of mutual funds was 470 billion RMB in 2005. At the end of 2015, the TNA had reached 8.4 trillion RMB (Mamatzakis & Xu, 2021). In addition, the average shareholdings of listed companies for Chinese mutual funds increased from 0.6 percent to 4.21 percent over the period from 2001 to 2014 (Chi et al, 2019).…”

“…Furthermore, the impact of mutual fund activism on corporate innovation can vary across institutional environments, which in this case includes state‐owned enterprises (SOEs) and non‐state‐owned enterprises (non‐SOEs). On the one hand, Mamatzakis and Xu (2021) and Lin et al (2016) claim that companies with a high level of government ownership tend to perform better than non‐SOEs and can provide effective monitoring on corporate governance. On the other hand, some researchers argue that SOEs undermine corporate governance mechanisms (Chen et al, 2007; Chen, Li, et al, 2017) and point out that SOEs may lack the incentive to implement innovative strategies and spend less on R&D (Qin & Zhang, 2019; Yuan & Wen, 2018), as their performance criteria are relevant to those which are social‐based rather than economic‐based (Yuan & Wen, 2018).…”