Higher State Ownership Research Articles

Impact of population ageing on the application of industrial robots: Evidence from China

China is experiencing a rise in its ageing population alongside rapid advancements in industrial robotics. Using panel data from China’s industries (2006 to 2021), this study empirically examines the impact of population ageing on the application of industrial robots. The results show that population ageing significantly promotes industrial robot application. The impact of population ageing on the application of industrial robots varies by industry. The promotion effect is greater in low and medium-technology industries than that of high-tech industries. This effect became more evident after 2012. Industries with high state ownership exhibit stronger influence coefficients than those with lower state ownership. Mechanism analysis indicates that population ageing promotes industrial robot adoption through the labour cost substitution effect. These findings offer insights for government policies to promote sustainable ageing and upgrading the manufacturing sector through artificial intelligence represented by the application of robotics.

Do personal political ties matter in SOEs’ access to bank credit? Evidence from China

The role of personal political ties in State-owned enterprises (SOEs) remains under-investigated due to the difficulty of disentangling these ties from SOEs' inherent political connections. Leveraging China's anti-corruption campaign, this paper distinguishes between personal and inherent political ties within SOEs to explore the effect of personal political ties on access to bank credit. Using ordinary least squares and difference-in-difference models, we find that SOEs whose executives lose personal political ties receive significantly less bank credit, resulting in more severe financing constraints. In an attempt to compensate, these SOEs employ tax avoidance strategies, though these measures prove insufficient. Consequently, such SOEs reduce their investment in long-term assets while increasing investment in research and development. Furthermore, our study reveals that the negative impact of severed personal political ties on access to bank credit is more pronounced in SOEs with high state ownership. The reduction in personal political ties among SOEs following the anti-corruption campaign helps mitigate the misallocation of bank credit. Overall, this study identifies personal political ties as a key factor influencing SOEs' access to bank credit and provides new evidence on the effectiveness of China's anti-corruption campaign by categorizing SOEs' political ties into personal and inherent connections.

Stock repurchases, ownership structure and board composition: evidence from Thailand

PurposeThis study aims to examine the influence of ownership structure and board composition on the probability and intensity of stock repurchases. The study’s sample comprises 3,744 firm-year observations, consisting of 53 repurchasing firms with 96 firm-year observations from 2008 to 2019.Design/methodology/approachProbit and fixed-effects regression models are used to obtain empirical results. Moreover, a probit model with a continuous endogenous regressor (IV-probit) and an instrumental variable method with two-stage least squares (IV-2SLS) estimation are used to address endogeneity.FindingsCorporations with high family or state ownership tend to inhibit stock repurchases to hoard excess free cash flow, supporting agency theory. Conversely, firms with high board independence tend to repurchase their stocks at least once to distribute free cash flows to shareholders, confirming agency theory. Nonetheless, corporations with more female directors on the board or CEO duality tend to conduct stock repurchases at least once but do not repurchase stocks with high values. Interestingly, more female directors on the board may send false signals about undervalued stocks.Originality/valueThis is the first study to reveal that firms with CEO duality repurchase their stocks at least once but avoid repurchasing shares with high values. It is also the first study to explore whether women on a board may cause false signaling about undervalued stocks. Furthermore, this study reveals that family and state ownership are potential determinants of stock repurchases in countries with high ownership concentration. This is the first study to address this issue in Thailand.

Market concentration and financial statement comparability: what is the role of state ownership? Evidence from SYS GMM and fsQCA

Purpose This paper aims to explore the moderating role of state ownership variables on the relationship between market concentration (MC) and financial statement comparability (FSC) in Vietnam. Design/methodology/approach This study uses data from the financial statements of 475 nonfinancial listed companies for the period from 2010 to 2019. This study uses both the system generalized method of moments and fuzzy-set qualitative comparative analysis (fsQCA) to consider the correlation and causal–effect relationships of the variables in the model. Findings The results show that MC has a positive relationship with FSC, and MC tends to exert a stronger impact on FSC for firms with higher state ownership. In addition, this study suggests that some combinations help improve FSC. This study has important implications for investors, managers and especially state-owned organizations when market power becomes fierce. Originality/value This study contributes to the literature on the comparability of financial statements in the context of developing countries that have not fully adopted International Financial Reporting Standards. Furthermore, this study applies the fsQCA method to complement the linear regression method.

The effect of state ownership on corporate investment efficiency: evidence from listed firms in Vietnam

Extant literature shows that state ownership is a special type of ownership. Politicians tend to follow both social and economic goals to maintain their positions. In some cases, they may sacrifice the latter to achieve the former. Therefore, firms with high state ownership face more serious agency problems than those with low state ownership. This study investigates how state ownership affects corporate investment efficiency in Vietnam, where privatizing state-owned firms is an important economic policy. Our sample includes 4,937 observations from firms listed between 2007 and 2020. Using fixed effects, random effects, random effects Tobit, pooled OLS, and Poisson regression with fixed effects, we find that state ownership has a negative impact on corporate investment efficiency. In addition, the multinomial logistic regression results show that firms with state ownership are more likely to engage in overinvestment. State ownership weakens corporate governance and thus creates opportunities for managers to expropriate shareholders. Managers tend to increase firm size through overinvestment to strengthen their positions; therefore, firms with state ownership have lower investment efficiency.

The Moderating Effects of State Ownership and Duality on the Relationship between Internationalisation and Firm Performance: A Case Study of Listed Firms in Vietnam

This study was aimed at assessing the moderating effects of state ownership and chief executive officer (CEO) duality on the relationship between internationalisation and the performance of listed firms in the Hanoi Stock Exchange (HNX). A detailed panel data set of listed firms between 2009 and 2018 was analysed and the ordinary least squares (OLS) results revealed that the performance of high internationalising firms with high state ownership was higher than that of those with low or non-state ownership. In contrast, the performance of high internationalising firms governed by CEO duality was lower than that of those without duality. The findings integrate the arguments of the resource-based view and the Uppsala model applied in the transition economy that suggest internationalising listed firms acquire certain benefits from the state, and the separation of the highest two positions in such firms facilitates the exact anticipation of uncertainties and risks in making business decisions.

The effect of FinTech development on financial stability in an emerging market: The role of market discipline

This study investigated the impact of financial technology (FinTech) development on financial stability in an emerging market. By using data from 37 commercial banks in Vietnam for the period 2010–2020, the study found that FinTech development negatively affected financial stability, and market discipline can mitigate this effect. However, heterogeneity analysis further showed that the negative effect of FinTech development on financial stability is stronger when the degree of financial stability is low, and the role of market discipline also becomes more important in such a situation. As another extension, we also found that the negative impact of FinTech on financial stability and the role of market discipline in mitigating such effect becomes stronger when banks have higher state ownership and becomes weaker when banks have higher foreign ownership. Our study provides important implications for regulators to develop FinTech and maintain financial stability in emerging markets.

Natural disasters and the role of regional lenders in economic recovery

We find that Chinese regional state-owned City-Commercial Banks (CCBs) landlocked by their remit to operate within a city, respond to natural disasters more effectively by aggressively expanding credit, especially to corporate borrowers. The credit expansion is robust to a difference-in-differences specification and is unobservable among non-CCBs in the same city. Moreover, the expansion is more pronounced in CCBs with high state ownership and those that are private. Despite the additional CCB lending, we do not find a drop in asset quality, and using satellite-based city night lights, we find post-disaster cities that experience greater CCB credit expansion enjoy stronger economic recoveries. Overall, our findings highlight the critical role played by regional state-owned lenders in economic recovery from increasingly frequent natural disasters.

Corporate social responsibility reporting in family firms: Evidence from China

We examine whether family firms differ from nonfamily firms in their corporate social responsibility (CSR) reporting practice. Using a sample of Chinese firms, we find that, compared to nonfamily firms, family firms are more likely to have a system in place that guides the establishment and development of their CSR activities. Family firms are also more likely to adopt the GRI guidelines, and they disclose significantly more information about their CSR practice. The findings are consistent with the notion that family firms are more long-term oriented and as a result, they are more concerned about firm reputation and use CSR disclosure as a means to establish and maintain a good reputation and to legitimize their behavior. We further find that the positive relation between family firms and CSR disclosure exists mainly in those firms with relative high state ownership, which helps mitigate government expropriation risk. Our research contributes to the limited literature on the relation between family firms and CSR practice. We also contribute to the literature on the impact of government expropriation risk and its interaction with firm ownership structure on firm behavior.

State-owned commercial banks

ABSTRACT This paper builds a new dataset on bank ownership and finds no evidence of a negative correlation between state-ownership of banks and economic growth. Banking crises predict increases in state-ownership but that there is no evidence that high state-ownership predicts banking crises. Contrary to past literature, the paper also shows that recent data show no difference between the profitability of private and public banks located in emerging and developing economies. The paper corroborates the existing literature which shows that in emerging and developing economies lending by state-owned banks is less procyclical than private bank lending.

The moderating role of state ownership in between product market competition and firm value: findings from GMM and fsQCA

AbstractThe study explores the link between product market competition (PMC) and firm value (FV) and examines the moderating role of the state ownership (SOE) variable in this relationship by using data from 555 listed firms on Vietnam's stock market from 2011 to 2019 on the Ho Chi Minh Stock Exchange (HOSE) and Ha Noi Stock Exchange (HNX). The System Generalized Method of Moments (SysGMM) is used to consider the relationship between variables. The findings from SysGMM indicate that product market competition has an effect on firm value. Firms with a high proportion of state ownership have a stronger correlation between product market competition and firm value than firms with a low proportion of state ownership. Additionally, we use fuzzy‐set qualitative comparative analysis (fsQCA) to consider the causal relationship of variables in the model. The fsQCA results show that FV increased when the combination of lower product market competition, higher state ownership, higher firm, and lower debt ratio, which is a common trend to help clarify the evidence in emerging markets. The research is significant for investors, listed companies, and particularly organizations with state ownership, since it enables them to develop specific strategies for enhancing corporate value as the competitive market grows more challenging. Simultaneously, the study concentrated on examining the causal relationships between the variables while utilizing the FSQCA approach in order to contribute to the literature review in the emerging market.

Tax Planning and Firm Value: The Case of Companies with Different State Ownership in Vietnam

The purpose of this paper is to examine the effect of tax planning on company value of listed companies in Vietnam, using the secondary data from audited financial reporting and other statistical documents of 513 non-financial companies in the period of 2015 – 2019. According to GLS, the research result shows that the tax planning has a positive effect on company value. In addition, state ownership, capital intensive and company size are control variables having a positive impact on firm value, but financial leverage is not. The findings suggest that financial managers should apply SAVANT framework and concentrate on fixed assets allocation and tax benefit of company size instead of leverage or high state ownership.

State ownership and value of cash: new evidence from an emerging market

PurposeThe purpose of this paper is to examine how state ownership influences value of cash in an institutional environment supporting soft-budget constraint.Design/methodology/approachThis study employs an interaction between state ownership and excess cash to examine how state ownership affects value of cash holdings based on Fama and French’s (1998) valuation model.FindingsWith a research data of 3,294 observations from 548 firms over the period 2009–2016, the authors find that state ownership is positively related to market value of cash. Moreover, this relationship is weaker in financially constrained firms.Originality/valueAlthough prior studies document a consistently negative effect of state ownership on market value of cash holdings, the authors argue that this effect may still be opposite. When managers of high state ownership firms rely on soft-budget constraint and save less cash, outside investors with this information disadvantage may focus more on precautionary motive and transaction motive than agency costs of cash holdings. As a result, value of cash holdings in high state ownership firms is higher. This paper contributes to the literature on corporate liquidity policy in emerging markets with new evidence on the role of state ownership in market value of cash holdings.

Entrepreneurial orientation and green management in an emerging economy: The moderating effects of social legitimacy and ownership type

By combining major tenets developed in the entrepreneurial orientation literature and institutional theory, we investigate the relationship between entrepreneurial orientation and green management in the context of emerging markets and the moderating effects of social legitimacy and ownership type. Using survey data from 239 firms in China, we find that entrepreneurial orientation is positively associated with emerging market firms' green management. This positive relationship is strengthened by social legitimacy and is stronger for state-owned enterprises than for non-state-owned enterprises. Furthermore, our empirical results partly support the idea that the configuration of high entrepreneurial orientation, high social legitimacy and state ownership is more effective in facilitating emerging market firms' green management than other configurations. This study explores a new perspective (i.e., the integration of an entrepreneurial approach and institutional theory) to explain why firms make differentiated green decisions in emerging markets. Additionally, the three-way configuration effects provide a more complete picture and thereby facilitate a deeper understanding of emerging market firms’ entrepreneurial spirit with regard to environmental issues.

The Real Effects of Mandatory Corporate Social Responsibility Reporting in China

We investigate the real effects of corporate social responsibility (CSR) reporting regulation enacted in China in 2008 covering both state‐owned enterprises (SOEs) and non‐state‐owned enterprises (NSOEs). As the CSR reporting requirement applies only to select firms, the regulation presents a unique setting that provides us with a suitable control sample of firms not subject to the regulation. Using a difference‐in‐differences approach, we document that relative to firms that are not affected by the regulation, NSOEs and SOEs with low state ownership subject to the mandate are associated with increases in CSR expenditures. Moreover, the real effects manifest in non‐core initiatives for these firms, whereas they manifest in core operating activities for SOEs with high state ownership. Finally, the effects of the mandatory CSR reporting on profitability and shareholder value are negative.

Does ownership type affect environmental disclosure?

PurposeIn recent years, firms tend to direct their attention in communicating their environmental actions with their stakeholders. However, the level of environmental disclosers varies significantly among firms. This paper aims to explain the variation in environmental disclosure of firms based on their ownership type, namely – state ownership and institutional ownership. The study further aims to understand whether and how the relationship between ownership structure and environmental disclosure changes regarding countries’ development levels.Design/methodology/approachThis paper uses a sample of 27,847 firm-year observations from 72 countries/economic districts between the years 2002 and 2017 and regression analysis to test how the relationship between different ownership structures and environmental disclosure and whether this relation is conditional on countries’ development levels.FindingsThis study finds that firms with higher state ownership have higher environmental disclosures and higher institutional ownership has a negative effect on environmental disclosures. Furthermore, this paper also documents that firms with higher state ownership and operating in developed countries have incrementally higher environmental disclosure, relative to firms operating in developing countries.Research limitations/implicationsThe study has limitations that would provide possible starting points for further research. The first limitation is related to the environmental disclosure measure, which reflects the level of environmental disclosure of firms based on their disclosure information given in the Thomson Reuters, Asset4 database. A more refined measure can be constructed using hand-collected data based on linguistic analysis, which may reflect not only the level of the disclosure but also the quality of the environmental disclosure. The second limitation is the limited focus of the study toward state and institutional shareholding. Therefore, future research may consider examining the different types of ownership such as family ownership.Practical implicationsThe findings of the study may help policymakers and regulators to consider the potential impact of various ownership types on environmental disclosures. Also, given the impact of countries’ development levels, regulators should consider that a one-size-fits-all is not applicable in environmental disclosures. Therefore, each country should consider the institutional dynamics of their operating environment to set appropriate regulations to enhance environmental disclosures.Social implicationsFrom a social perspective, the findings indicate that firms’ stakeholder engagement via environmental disclosures depends on the type of the controlling shareholders.Originality/valueThis study contributes to the literature by developing a new construct for environmental disclosure based on Biodiversity, Climate Change, Environmental Investments and Spill Impact Reduction performance measures. Further, grounding on legitimacy and stakeholder theories, this study shows the influence of ownership type on environmental disclosures and how this effect changes in accordance with the countries’ development.

Do all female directors have the same impact on corporate social responsibility? The role of their political connection

Previous studies generally assume that all female directors have the same level of social orientation and equal impact on corporate social responsibility (CSR). However, we argue that they may differ in social orientation due to their past experience. As political experience is predicted to strengthen social orientation, we differentiate female directors into those who are politically connected and those who are politically disconnected. On this basis, we tested the differential impact of these two types of female directors on CSR. Drawing upon upper echelons theory, we argue that politically connected female directors are more socially oriented than politically disconnected female directors and consequently have a stronger positive effect on CSR. Using a sample of Chinese publicly listed firms on the Shanghai or Shenzhen Stock Exchanges from 2007 to 2015, we find that the results support our proposition. Further, we find that state ownership moderates the relationship between politically connected female directors and CSR such that the relationship is weaker in organizations with higher state ownership. These findings add to the current research by offering a nuanced understanding of the effect of politically connected female directors on CSR and addressing the limitation in this line of research that assumes all female directors are homogeneous in their impact on CSR.

Are Foreign Investors Afraid Of State Ownership?

State ownership may help firms have better access to credit and lower financing costs but it also results in “double agency” problem. This paper investigates whether foreign investors are afraid of investing in firms with state ownership. Our research sample includes 4,079 firm-years from 567 firms listed in Vietnamese stock markets during the period 2008-2017. We employ probit and tobit models to examine how state ownership determines foreign investors’ likelihood to invest and investment magnitude respectively. Furthermore, we continue to examine how an increase in state ownership changes foreign ownership. We find that firms with higher state ownership have lower foreign ownership. Besides, an increase in state ownership reduces foreign ownership. These findings imply that foreign investors tend to avoid investing in firms with high state ownership due to their concern for “double agency” problem.

Natural Disasters and the Role of Regional Lenders in Economic Recovery

We find that Chinese regional state-owned City-Commercial Banks (CCBs) landlocked by their remit to operate within a city respond to natural disasters more effectively by aggressively expanding credit, especially to corporate borrowers. The credit expansion is more remarkable in CCBs with high state ownership and those that are private. However, the additional lending does not sacrifice asset quality. Moreover, using satellite-based city night lights, we find post-disaster cities that experience greater CCB credit expansion enjoy stronger economic recovery. Overall, our findings highlight the critical role played by regional state-owned lenders in economic recovery from increasingly frequent natural disasters.

Financial Reporting Quality, Corporate Governance, and Idiosyncratic Risk: Evidence from a Frontier Market

We extend current literature by providing empirical evidence on the impacts of financial reporting quality and corporate governance mechanism - two firm-level determinants that are strongly affected by the unique market setting and regulatory framework in emerging/frontier markets - and idiosyncratic risk in Vietnam. Utilizing different panel data analysis techniques, we find high-quality financial reports can mitigate firm-specific risk. Firms with high state ownership tend to have lower idiosyncratic risk too, implying the monitoring role of the government. We also document a positive link between board size and firm specific risk. Our results are thus beneficial for industry regulators and firms in ensuring good governance and reporting framework to better manage firm risk.