Research on the Agency Problem, Corporate Governance and Firm Value

Abstract

Based on the financial data of 373 private listed companies in Shanghai and Shenzhen Stock Exchanges in 2019, this paper makes a theoretical analysis and empirical test on corporate governance and enterprise value by using agency theory. This paper finds that China's private listed companies have agency conflicts in four directions: ownership concentration, debt financing proportion, the deviation of control right and ownership, the deviation of the stock prices of tradable shares and non-tradable shares. This paper points out that the primary reason for the agency conflict of private listed companies is the price separation of tradable shares and non-tradable shares. The split share structure system is the product of the joint-stock reform of state-owned enterprises. After the reform of the split share structure, the non-tradable shares of private listed enterprises in China are mainly corporate shares and management shares. Although management shares can play a positive role in corporate governance, the excessive shareholding of the management will also lead to the decline of its constraints and endanger the interests of the company. Therefore, private listed companies should establish a restraint mechanism matching with the equity incentive mechanism.