Firm performance, government regulation, and managerial effort: Evidence from China

Abstract

AbstractUsing the most recent data from the World Bank Enterprise Survey for China, this research shows that ownership structure significantly impacts firm performance and firm characteristics. Our results show the importance of getting to grips with government regulation, as the time spent by senior management dealing with government regulation is the most significant independent variable. Another key finding of this article is that China has excellent economic institutions conducive to doing business. It is far easier to conduct business in China than in the other BRIC countries. We conclude that partial privatizations of state‐owned enterprises on their own are unlikely to bring substantial efficiency gains. Reforms must also include better incentives and monitoring of management. Our findings are robust and consistent with various controls, alternative measures of firm performance, and different estimation methods, including quantile regression.