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Company Ownership Structure, Legal Compliance and the Probability of Winning an Employment Lawsuit in China

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  • Ke Zhenxing

    (Nankai University, Tianjin, China)

Abstract

This paper investigates empirically whether firm ownership structures contribute to varying levels of legal compliance, which ultimately influence the likelihood of winning a lawsuit. I hypothesize that private companies are more likely to lose employment lawsuits because the rule of law within the company is rarely established. Using collected 2756 employment judgments decided by district courts in Beijing between 2014 and 2018, I test this hypothesis against three other types of ownership structures in China: state-owned enterprises, wholly foreign-funded companies, and partly foreign-funded companies. The statistical result confirms that private companies are more likely to lose cases, thus supporting the proposed hypothesis. In addition, the company’s scale and the company’s life span also have a significant influence on the employment lawsuit result.

Suggested Citation

  • Ke Zhenxing, 2021. "Company Ownership Structure, Legal Compliance and the Probability of Winning an Employment Lawsuit in China," Asian Journal of Law and Economics, De Gruyter, vol. 12(3), pages 269-286, December.
    • Handle: RePEc:bpj:ajlecn:v:12:y:2021:i:3:p:269-286:n:6
    DOI: 10.1515/ajle-2021-0033
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