Abstract
Using data from a recent national survey on the ownership reform of state-owned enterprises in China, we study the effects of reducing politician control and agency problems on the financial performance of the reformed firms. Taking into account the endogenous nature of the reforms, we find that firm performance is positively affected by the lessening of politician control by increasing the firm's flexibility in labor deployment and by the mitigation of agency costs through the introduction of more effective corporate governance mechanisms such as one-share one-vote and shareholding-based board structure composition. Ownership structure also affects performance: relative to shareholding by the state, foreign ownership has a positive effect on firm performance; individual (mostly employee) shareholding has a negative effect; whereas the effect of collective and legal person shareholding is indistinguishable from that of state shareholding. Somewhat surprisingly, operating autonomy (excluding labor deployment flexibility) has a negative effect on firm performance, suggesting serious agency problems in the reformed enterprises.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
