Reform Of State-owned Enterprises Research Articles

State-owned asset management reform and corporate cash holdings: study on central enterprise income distribution policy

ABSTRACT Based on the data of A-share listed central state-owned enterprises (CSOEs) and non-state-owned listed companies in China from 2003 to 2019, we use propensity score matching and the difference-in-difference method to examine the impact of CSOEs’ income distribution policy on corporate cash holding decisions. The results show that the policy implementation improves corporate cash holding levels. Further analysis found that: (1) corporate financial flexibility can alleviate the policy effect; (2) when the control distance is shorter, and environmental uncertainty is higher, the policy effect is stronger; and (3) the policy has a lagged effect. This study theoretically expands the research on the economic consequences of income distribution policy and the influencing factors of cash holdings. It further aids policymakers in improving the state-owned capital gains distribution system, deepening the reform of state-owned enterprises, and providing empirical evidence at firm level for investors to understand the real impact of the policy.

The influence of state-owned enterprise reform on enterprise innovation: new evidence from China

ABSTRACT The leading group of the State-owned Enterprise Reform of the State Council of China launched a three-year Double Hundred Action for state-owned enterprises in 2018. This study empirically examines the effect of the Double Hundred Action from the perspective of innovation investment using a sample of state-owned listed enterprises from 2013 to 2020. The study finds that the Double Hundred Action significantly improves the innovation investment of state-owned listed enterprises. Furthermore, our main results are more pronounced for firms with competitive industries, a low ratio of independent directors, and auditors not belonging to the ‘Big Four’. This study explores the factors influencing corporate innovation from the new perspective of the Double Hundred Action, and also enriches the study of the economic consequences of SOE reforms. This study provides empirical evidence of the positive effects of SOE reforms in emerging markets and has important policy implications for deepening the governance of SOEs.

Between ‘Retreat’ and ‘Recentralisation’: China’s SOE Reform Conundrum

State-owned enterprises (SOEs), a key constituent of China’s economy, are an important reference for analysing China’s evolving state-market relations. Market-oriented reforms introduced in the SOE sector over the past four decades have seen the Communist Party of China (CPC) loosen its control over SOEs, shedding a large number of loss-making enterprises, and significant restructuring of remaining enterprises, including by public listing. But these achievements still fall short of making Chinese SOEs ‘modern enterprises’, and they continue to be extensions of the Chinese Party-state. Using Party documents, speeches and policy announcements, this article explores key changes and continuities in China’s state-owned sector in the post-liberalisation era. It contends that the neoliberal turn in China’s economic transition cannot be understood in the radical separation of state and market configurations but that reform and restructuring of SOEs have to be situated in a political-institutional landscape where multiple interests compete over the formulation of economic policy.

Analysis on Corporate Governance of State-owned Enterprises

Corporate system has become one of the most important forms of economic organization in the modern enterprise system under the condition of market economy. Whether the corporate governance structure is perfect or not plays a decisive role in the normal operation and development of the economy. So far, the reform of state-owned enterprises has lasted for nearly 40 years, and the reform has made great achievements, but there is still a certain distance from the reform goal. The corporate governance problems of state-owned enterprises lead to the rights of state-owned enterprises cannot be fully realized and guaranteed. The Realistic Dilemma of Corporate Governance in China appears. This paper discusses the market disadvantages in the operation of state-owned property rights, the governance structure of state-owned enterprises, and the existing problems of state-owned enterprises, and how to overcome these disadvantages.

System Dynamics Analysis of Upper Echelons' Psychological Capital Structures in Chinese Mixed-Ownership Reform Enterprises During the COVID-19 Pandemic.

The COVID-19 pandemic has caused major changes in the psychological capital structure of individuals and groups, especially among members of the upper echelons of Chinese mixed-ownership reform enterprises, who are more sensitive to the environment. Based on prospect theory. In order to further study the changes in the psychological capital structure of upper echelons of the mixed ownership reform of state-owned enterprises under the influence of the COVID-19, and what impact it has on the decision-making behavior of the upper echelons and the development performance of the mixed ownership reform enterprises, this paper introduces the system dynamics research method into the research field of the upper echelons for the first time, and studies the psychological capital structure of the upper echelons through simulation. This paper puts forward new research ideas for the research on the psychological capital structure of upper echelons. Using the system dynamics method, this study investigates the changes induced by the COVID-19 pandemic, on the psychological capital structure of the upper echelons of Chinese mixed-ownership reform enterprises; and assesses the concept model of behavioral psychological capital adjustment. The impact of COVID-19 on communication strategies among upper echelons, directly affects the evolution results of the decision-making system. The psychological capital structure in the upper echelons has evolutionary stability strategies in three cases. In some cases, the system evolution presents periodic characteristics. The higher the probability of group communication, the more stable the psychological capital structure, and the greater the fluctuation of behavioral integration. There is a significant correlation between the level of efficacy and resilience of upper echelons psychological capital structure and upper echelons decision-making behavior. Under the condition of improving the communication probability among upper echelon members, there is a positive correlation between the level of hope and optimism of upper echelon and the power structure of upper echelon and the development performance of mixed reform enterprises. Develop the psychological capital structure of upper echelon of mixed reform enterprises, improve the level of financing development decision-making ability and improve decision-making performance.

Research on Competitive Neutrality of SOEs with Special Functions in China

A Deviation from competitive neutrality is one of the main problems faced by Chinese state-owned enterprises. Based on the orientation of the classification reform of state-owned enterprises to all kinds of enterprises, we discuss the competitive neutrality of state-owned enterprises with special functions from the perspectives of enterprise policy burden and enterprise profits. The research herein shows that state-owned enterprises, as the main entities of policy burden, have undertaken social responsibilities such as helping the government to stabilize employment, which has caused problems such as creating redundant employees, reducing the efficiency of employees, and reducing the profits of enterprises. To make up for the loss of profits of enterprises that bear the policy burden, the government provides them with implicit guarantees, which makes it easier for them to obtain bank loans and other external factors, and the asset–liability ratio of enterprises increases, which comprises the problem concerning a deviation from competitive neutrality that the United States and other western countries have surmised. However, the empirical study found that the deviation from competitive neutrality in financing actually reduced the profits of enterprises, that is, the state-owned enterprises faced a certain competitive disadvantage. Based on the research conclusion herein, this paper puts forward some enlightening findings on state-owned enterprise reform.

Do companies compare employees’ salaries? Evidence from stated-owned enterprise group

The mechanism by which enterprises set salaries is vitally important to employees and is especially relevant to the reform of state-owned enterprises (SOEs). This paper investigates the effect of comparing employee compensation based on a sample of A-share SOE groups from 2008 to 2018. We find that when employee compensation at one company sharply increases, the employee compensation of other companies controlled by the same group will increase sharply in the following year. Further analysis shows that when employees’ sense of unfair compensation is stronger, when employees are less replaceable and when enterprises’ ability to pay is stronger, the effect of employee pay comparison is stronger. Increased employee salary does not improve enterprise performance, however, suggesting that such salary adjustment is ineffective. This paper expands the research on employee compensation and provides useful insights for optimizing the design of compensation contracts and promoting compensation reform in SOEs.

Does mixed ownership reform affect private firms’ ESG practices? Evidence from a quasi‐natural experiment in China

AbstractThis study investigates the impact of property rights reform on private firms’ environmental, social, and governance (ESG) practices. ESG investing has become mainstream and a hot topic globally, but it is a black box of corporate ESG practices and performance. Importantly, it is not clear how to specifically enhance private firms’ ESG practices. This study addresses this problem by exploring an ideal setting of China's mixed‐ownership reform in which private firms acquire equity in state‐owned enterprises (SOEs). We examine whether and how this reform affects private acquirer firms’ ESG practices. Using a powerful difference‐in‐differences design, we find that mixed‐ownership reform significantly enhances private firms’ ESG practices through heightened public scrutiny and the privileges of formal financing and government subsidies that are available due to the firms’ partial government ownership after mixed‐ownership reform. Our findings have policy implications for promoting ESG practices and SOE reform. Specifically, our empirical evidence indicates that mixed‐ownership reform can facilitate sustainable development for both SOEs and private firms.

Firm dynamics and SOE transformation during China’s Economic Reform

We study the reform of China’s state-owned enterprises (SOE) with a focus on the corporatization of SOEs. We first document the empirical patterns of the “grasp the large and let go of the small” policy. To quantify the implications of the reform for aggregate output and TFP, we build a three-sector firm dynamics model featuring financial frictions and endogenous firm-type choices. Our calibrated model shows that the SOE reform can increase long-run TFP by encouraging the exit of the least efficient firms in the state sector, but the magnitude of TFP growth also depends on the efficiency in capital reallocation. In the short run, corporatization increases aggregate output and TFP because it allows the most productive SOEs to have a higher borrowing capacity than they would under privatization.

Research on the Impact of Board Governance Model Based on Multi-Internet of Things Perception System on System Risk of Large Business Institutions in China

Corporate governance structure is a subject of great theoretical and practical significance, especially the impact of board characteristics on corporate performance, which has been the focus of scholars’ attention. However, due to the particularity of China’s commercial institutions, especially the state-owned commercial institutions in the transition economy, which have a strong government-led color in system, commercial institutions mainly rely on strengthening the governance of the board of directors to improve the effectiveness of their internal governance. Based on the basic principles of the Internet of Things (IOT) business environment, this paper divides the architecture of multiple IOT perception system into perception domain and business domain. This paper studies the development mode of the economic and business perception system stage of the Internet of Things: the primary stage, the growth and maturity stage, and the integration stage. Strengthen the establishment of an independent director system, create an environment in which independent directors exercise full power, strengthen penalties for violations of directors, strengthen the integrity of directors, and establish a scientific and reasonable board evaluation mechanism. The effective operation of enterprises is based on the perfect market rules and a good market order. The reform of state-owned enterprises with the core of establishing a modern enterprise system and improving corporate governance structure must be carried out simultaneously with the construction of market systems.

Comprehensive Benefit Evaluation and Regional Difference Research of State-owned Mixed-ownership Enterprises.

Scientific and accurate assessment of the comprehensive benefits and regional differences of state-owned mixed-owned enterprises is an important link in promoting the steady progress of mixed-ownership reform of state-owned enterprises and achieving high-quality development of the state-owned economy. Using factor analysis method and GA-BP neural network model to evaluate the comprehensive benefits of listed state-owned mixed enterprises, the results show that, first, the main factors affecting the comprehensive benefits of state-owned mixed enterprises are profitability factor, sustainability factor and solvency factor, and the effect is as follows: profitability factor>sustainability factor>solvency factor; second, factor analysis effectively improves the evaluation performance of the GA-BP neural network model. Further analysis of regional differences, it is found that the average comprehensive benefit of regional state-owned mixed enterprises is: eastern region > central region > western region. Among them, the profitability factor and solvency factor are as follows: eastern region>central region>western region, and the size of sustainability factor is: eastern region>western region>central region. Therefore, we can start from deepening the classification reform of state-owned enterprises, increasing investment in innovation, reducing financial leverage, and improving regional linkages, so as to improve the profitability, solvency and sustainability of enterprises, narrow regional differences, and achieve coordinated development between regions.

Endowment Structure, property rights and reforms of large state-owned enterprises (SOEs) in China: Past, present and future

Based on the criteria of the factor endowment structure of state-owned enterprise (SOE) sectors in China between 1980 and 2018, this paper rationalizes the classified reforming of China's state sectors by constructing a Nash bargaining model to capture the dynamics of ownership restructuring, and the reduction process of policy burden on SOEs. We reveal that the interplay between policy burden bared by SOEs and the ownership restructuring process largely depends upon their factor intensities since the reform period in the 1980s. Our model identifies two Ownership Reform Irrelevance Points (ORIP), which serve as the benchmark for the dynamics of the ownership restructuring process of China's large SOEs, which saw them move from ‘mixed-ownership’ to ‘privatization’. ORIPs demonstrate the need for a reduction in social policy burdens with regards to the state sector's comparative advantage of factor endowment structure through SOE ownership restructuring. This study theoretically analyzes existing literatures on the classified reforms of China's state sectors from 1978 to 2018. This study is the first to base such an analysis on the criteria of factor endowment structure focusing on the connection between the policy burdens bared by SOEs and their ownership restructuring process.

Reforging the Rust Belt: China’s Northeast on the Silver Screen

Abstract In the 1990s, China’s northeast including Liaoning, Jilin, and Heilongjiang provinces, the bastion of state-owned heavy industry, underwent a massive state-owned enterprise (SOE) reform engineered by Deng Xiaoping as part of the “Reform and Opening-up Policy,” which resulted in large-scale SOE bankruptcies and some 30 million blue-collar workers being laid off. 20 years after the reform, China’s northeast, once among the most urbanized regions in the country, has effectively become China’s “Rust Belt.” This article examines the cinematic representations of China’s Rust Belt, specifically in China’s northeast, arguing that cinema plays a crucial role in both capturing and interrogating the emergence of new urban spaces and urban subjects amidst the spatial and ideological reorientations of the reform era. It also investigates the ways in which cinematic representations, through a shifting “system of symbols,” mediate the contradictions in the production of urban spaces, cultural norms, and social identities.

Political governance in China’s state-owned enterprises

State-owned enterprises (SOEs) are both the economic and political bases of the Chinese Communist Party (the Party) and the Chinese state. The overarching principle of SOE reform is to firmly implement the Party’s leadership and the modern enterprise system. This principle creates a political governance system in China’s SOEs—a Party-dominated governance system characterized by Party leadership, state ownership, Party cadre management, Party participation in corporate decision-making, and intra-Party supervision. This survey explains the logic of political governance in China’s SOEs, presents the evolution and current practices of each element of the system, and discusses findings from both academic research and the field.

Political Networks and Stock Price Comovement: Evidence from Network-Connected Firms in China

Abstract In this article, we examine whether comovement in the stock prices of pairs of Chinese firms connected to the same political network are systematically shaped by the prevailing coordination versus competition incentives of that network’s politicians. We find strong evidence from 2000 to 2012 (Jiang’s and Hu’s regimes) that stock price comovement is affected by the embeddedness of the firm–politician ties within the network. Among pairs of firms connected to a network through a common politician, we document an increase in stock price comovement. For those pairs of firms connected to a common network via separate politicians (rather than a common politician), we document a relative decrease in stock price comovement. This negative effect suggests that politicians’ relationships within these political networks are generally adversarial rather than cooperative in nature. These results become significantly weaker during Xi’s regime from 2013 to 2017, suggesting that Xi’s anti-corruption campaign and state-owned enterprise reforms may have attenuated these political network effects on the firms. Our additional tests also show that stock price comovement becomes even more positive (negative) in settings which are expected to increase the coordination or decrease the competition (decrease the coordination or increase the competition) of the politicians.

Mixed-ownership reform and deleveraging of state-owned enterprises: Degree and methods

ABSTRACT Based on data of state-owned enterprises listed on the Shanghai and Shenzhen Stock Exchange from 2007 to 2018, this study examines how mixed-ownership reform affects the deleveraging behaviour of state-owned enterprises (hereafter, SOEs). We find that the higher the degree of equity balance between state-owned shareholders and non-state-owned shareholders of SOEs, the more inclined they are to choose to deleverage. As for the methods of deleveraging, they are more inclined to choose retained earnings and current debt repayment in the deleveraging process. Furthermore, this effect is more pronounced for SOEs with excess leverage, in low marketisation regions and pronounced for both centre SOEs and local SOEs. We also find that mixed-ownership reform increases deleveraging SOEs’ operating performance. The results suggest that mixed-ownership reform can efficiently promote the deleveraging behaviour of SOEs in positive ways.

Research on the Influence of Mixed-Ownership Reform on Exploratory Innovation of SOEs: The Mediation Effect of Agency Conflict and Financing Constraint

State-owned enterprises (SOEs) are the leading force in the national economy. The main goal of mixed-ownership reform is to enhance the SOEs’ independent innovation capability, thereby bringing high-quality development of the national economy. Based on the baseline regression and mediation effect model, this study explores the impact of mixed-ownership reform on exploratory innovation of SOEs from ownership structure adjustment and control rights allocation. The results show that the diversity of mixed shareholders, the depth of mixed equity, and the control of mixed equity significantly increase the SOEs’ exploratory innovation investment. And the shareholding ratio of heterogeneous shareholders has a differentiated influence on exploratory innovation. The mediation effect test indicates that the promotion effect of mixed-ownership reform of SOEs in the ownership structure dimension is achieved by reducing the second-type agency conflict and easing the financing constraints. In contrast, the promotion effect in the control rights allocation dimension is achieved by lowering the first-type agency conflict. The findings demonstrate that the mixed-ownership reform have positive effect on the SOEs’ exploratory innovation investment, and the different dimensions of mixed-ownership reform have disparate function routes to exploratory innovation. This study provides guidance for SOEs on how drive national innovation development through mixed-ownership reform. SOEs should guarantee the rights of non-state-owned capital to hold shares and appoint directors, improve internal governance mechanisms, so as to accelerate the development of exploratory innovation activities.

Reforms in the Management System in State Enterprises in Montenegro

The efficiency of each member of the management of state-owned companies with clients, ie users (citizens) of their services, is very important for business communication. Through a proactive relationship with the media, clients and taxpayers, the Department of Communications and International Cooperation contributes to establishing a positive atmosphere with the citizens of Montenegro. Scientific research on the subject of this paper will make a significant contribution by pointing out the way of working in state-owned enterprises, the importance of examples of six principles of the Organization for Economic Cooperation and Development (OECD), the benefits of corporate governance, and point out gaps and offer possible solutions. would contribute to improving the provision of services of general interest to the satisfaction of both the owner and the user of the public enterprise service. It is of great importance to point out the future legal solutions on the performance of communal activities to change the competence, and thus the management of state communal enterprises in Montenegro. The specific contribution of the research is reflected in the consideration of the reform of state-owned enterprises in Montenegro, needs and assumptions for reform, preparation of state-owned enterprises for knowledge-based society, informatization of state-owned enterprises, socially responsible business and their information system. By accepting the basic concept of quality and treating citizens and other users of their services in a different way, the work of state-owned enterprises must be better, faster and cheaper. Related to this is the hypothesis of this paper that the ruling parties and changes in the business environment inevitably require new concepts of governance and the six principles of OECD corporate governance in state-owned enterprises have not been applied.

Corporate Governance with Chinese Characteristics: Party Organization in State-owned Enterprises

AbstractThis article analyses the role of the Chinese Communist Party (CCP) in the corporate governance of Chinese state-owned enterprises (SOEs), including a case study of a central-level SOE holding group. Relying on official documents, secondary literature and interviews with enterprise managers, government officials and academics, the article documents how the CCP has actively formalized its role in Chinese business by embedding itself in the corporate governance structure of SOEs. Through the application of Chinese indigenous administrative corporate governance concepts such as “bidirectional entry, cross appointment” and “three majors, one big,” the CCP has consolidated its dominance of enterprise decision-making procedures and personnel appointment and created a hybrid, Party-led model of corporate governance. While this hybrid model can secure enterprise compliance, communication with higher state and Party organs, as well as long-term development planning, it is unlikely to help solve SOE efficiency problems and may even undermine other SOE reforms.

The effect of job displacement on labor market outcomes: Evidence from the Chinese state-owned enterprise reform

We estimate the long-term costs of job displacement for individuals who lost their jobs during the dramatic reform of state-owned enterprises (SOEs) in the late 1990s in China, using data from the China Health and Nutrition Survey. We find that the workers displaced during the SOE reform suffered substantial and persistent earnings losses. In addition, by comparing wage losses and reductions in employment and work hours over time, we find that the majority of long-term earnings losses were driven by declines in post-displacement wages. Moreover, we find that the displaced workers tended to find reemployment in low-skilled occupations, in the private sector, with less profitable employers, and through informal contracts, which may explain the substantial costs of displacement.