Previous literature on equity ownership structure has focused mostly on issues related to corporate governance. There has hitherto been little research that examines the firm’ growth from the perspective of equity ownership structure. The current study explored the long-term impacts of different equity ownership structures on the growth of large-cap and small-cap companies in three different periods around the financial crisis in 2008. The goals were not only to provide investors with public information related to a company’s equity ownership structure but also to examine the growth of a company from different angles. Empirical findings showed that equity ownership structure did impact a company’s end-of-period price-to-book ratio, price-sales ratio, and the growth rate of a company’s total asset and shareholders’ equity in the next period. This means that equity ownership structure would affect the growth of an enterprise, although the effects vary with the fluctuation of the economy and company sizes.
The research found that government shareholding had significant negative impact on the end-of-year price-to-book ratio of large-cap stocks during the financial crisis and the subsequent period of recovery. The shareholding of financial institutions all had significant positive impact on the price-sales ratio. The shareholding of foreign investors had significant positive impact on the price-to-book ratio. For small-cap stocks, government shareholding had significant positive impact on both the end-of-period price-to-book ratio and price-earnings ratio during the crisis. During the period of stability, however, government shareholding had significant negative impact on the end-of-period price-sales ratio.
This study further examined the impacts of various types of shareholding on the growth of a company in the next period. The research showed that for large-cap stocks, government shareholding had significant negative impact on the total asset growth rate in the next period during both the time of crisis and the time of stability. During the crisis and the subsequent period of recovery, government shareholding had significant negative impact on the growth rate of shareholders’ equity in the next period. For small-cap stocks, the research found that the shareholding of foreign investors positively impacted the growth rate of shareholders’ equity in the next period during both the time of crisis and the time of stability.
