We presume that managerial discretion is a moderating variable, which influences relationship between ownership concentration and firm performance. Based on the managerial discretion theory, we introduce managerial discretion into the Burkart and Gromb's model, and then deduce two hypotheses. Using data of 117 largest shareholder controlling firms (Z index more than 5), through the curve estimation procedure and hierarchical regression, we find that (1) managerial discretion is a exponential function of ownership structure (alpha), decreasing with alpha increasing, (2) there is a significant inverse relationship between firm performance and ownership structure, (3) the interactive effect of ownership structure and managerial discretion on performance is not significant.