Large Shareholdings and Firm Value: Evidence from Chinese Listed Companies

Using the cross-section data of Chinese non-financial listed companies from year 2001 to 2005, this paper investigates the effects of large shareholdings on firm value, as measured by Tobin´s Q. Consistent to our theoretical expectation, there is a significant curvilinear relationship between large shareholdings and firm value. The results indicate that in the context of concentrated ownership, the key to improve corporate governance is to arrange ownership structure reasonably so as to induce large shareholders´ monitoring behaviors and restrict their expropriation.