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Does ownership structure affect performance? Evidence from Chinese mutual funds

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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.

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Notes

  1. The China Securities Regulatory Commission (CSRC) is the main regulator of the securities industry in China and its operations are similar in its charge to the SEC in the United State.

  2. We also consider the interactions between ownership concentration and foreign ownership and the interactions between ownership concentration and government ownership.

  3. Following recent studies, we summarize the attributes of mutual funds and fund management companies for comparison purposes in Appendix Table 19.

  4. The terms ‘fund management company’ and ‘fund family’ are interchangeable.

  5. The market return is calculated by 30% of the Shanghai Composite index, 30% of the Shenzhen Composite index and 40% of the Shanghai Government bond index, because approximately 40% of the total assets are invested in the bond market in the Chinese mutual fund industry. Most studies use the average of the Shanghai and Shenzhen market index as the market return (Zeng et al. 2015), as they are only concerned with the performance of equity mutual funds.

  6. Dong et al. (2014) examine the ownership structure in Chinese commercial banks from 2003 to 2011.

  7. Chen et al. (2017) investigate the ownership structure in Chinese privatized firms from 1981 to 2008.

  8. According to CSMAR database, we calculate the average return of investments in global equities for all fund management companies which is much lower than the average fund management company return in our sample period.

  9. This paper employs Roodman’s (2009) “Xtabond2” specification in Stata.

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Authors and Affiliations

  1. Department of Management, Birkbeck College, University of London, London, WC1E 7HX, UK

    Emmanuel Mamatzakis

  2. Business, Management Department, Jubilee Building, University of Sussex, Falmer, BN1 9SL, UK

    Bingrun Xu

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  1. Emmanuel Mamatzakis
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Appendix

Appendix

See Table 17.

Table 17 Definitions of Variables
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Table 18 presents all the correlation coefficients of the independent variables. We find that almost all of the correlation coefficients are below the value of 0.4. This means that the independent variables in the regressions are not highly correlated (Table 19).

Table 18 Correlation matrix of independent variables
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Table 19 Variables used to analyze the relationship between ownership structure and fund performance
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Mamatzakis, E., Xu, B. Does ownership structure affect performance? Evidence from Chinese mutual funds. Rev Quant Finan Acc 56, 1399–1435 (2021). https://doi.org/10.1007/s11156-020-00929-2

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