State Dominant and Non-State Dominant Ownership Concentration and Firm Performance: Evidence from China

35 Pages Posted: 25 Mar 2008 Last revised: 28 Mar 2008

See all articles by Kurt Hess

Kurt Hess

Independent Credit View

Abey Gunasekarage

Monash University; Monash University

Martin Hovey

UNE Business School

Date Written: March 26, 2008

Abstract

This study investigates the relationship between firm ownership structure and performance for a comprehensive sample of Chinese listed firms for the period from 2000 to 2004. We find a convex relationship between state ownership and firm value, i.e. ownership by the state is beneficial at levels above approximately 35% but negative effects on value are observed at lower levels. The main theme of the paper relates to analysis of effects of private block shareholders on value. We examine this issue both in an OLS and 2SLS equation framework which takes account of potential endogeneities in ownership-performance relationship. We find evidence that the presence of large private shareholders at firms with no significant state holdings is detrimental to the performance of these firms.

Keywords: Ownership concentration, Ownership structures, Corporate performance, Emerging markets, China

JEL Classification: G3, G32

Suggested Citation

Hess, Kurt and Gunasekarage, Abeyratna and Hovey, Martin T., State Dominant and Non-State Dominant Ownership Concentration and Firm Performance: Evidence from China (March 26, 2008). Available at SSRN: https://ssrn.com/abstract=1112383 or http://dx.doi.org/10.2139/ssrn.1112383

Kurt Hess (Contact Author)

Independent Credit View ( email )

Schweizergasse 21
Zürich, 8001
Switzerland

Abeyratna Gunasekarage

Monash University ( email )

Building 11E
Clayton, Victoria 3800
Australia

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Martin T. Hovey

UNE Business School ( email )

TRAVENA ROAD
Armidale, NSW 2351
Australia

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