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Control Modes and Outcomes of Transformed State-Owned Enterprises in China: An Empirical Test

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  • Li, Shaomin
  • Xia, Jun
  • Long, Cheryl Xiaoning
  • Tan, Justin

Abstract

The transformation of state-owned enterprises (SOEs) into efficient entities has been an important approach in transition economies. However, the transition literature reveals little about how control structure affects firm performance of transformed SOEs. Drawing on agency theory, we distinguish three modes of control in transformed SOEs: state-controlled, dispersedly controlled, and privately controlled modes and argue that actual control after transformation plays a critical role in determining performance. Examining the impact of different control modes in China, we find that the key is who controls the transformed firm. Non-state-controlled (dispersedly controlled and privately controlled) firms are more likely to have enhanced post-transformation performance and reduced agency costs than state-controlled firms.

Suggested Citation

  • Li, Shaomin & Xia, Jun & Long, Cheryl Xiaoning & Tan, Justin, 2012. "Control Modes and Outcomes of Transformed State-Owned Enterprises in China: An Empirical Test," Management and Organization Review, Cambridge University Press, vol. 8(2), pages 283-309, July.
    • Handle: RePEc:cup:maorev:v:8:y:2012:i:02:p:283-309_00
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    Cited by:

    1. Klishevich, Daria & Panibratov, Andrei, 2024. "The omnipresence of the state and its effect on the internationalization of companies: The Russian variety of state capitalism," Journal of International Management, Elsevier, vol. 30(4).
    2. Jiaying Fan & Kai Wang & Lidong Wu, 2023. "Monitoring the Type I Agency Problem or the Type II Agency Problem? Directors Appointed by Non-State Shareholders and the CEO Turnover–Performance Sensitivity," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(7), pages 2160-2189, May.
    3. Paul McGuinness & Kevin Lam & João Vieito, 2015. "Gender and other major board characteristics in China: Explaining corporate dividend policy and governance," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 989-1038, December.
    4. Zhang, Lin & Cui, Lin & Li, Sali & Lu, Jiangyong, 2018. "Who rides the tide of regionalization: Examining the effect of the China-ASEAN Free Trade Area on the exports of Chinese firms," International Business Review, Elsevier, vol. 27(3), pages 501-513.
    5. Zhang, Fan & Zhang, Jiewei & Gao, Ya & Wang, Zhuquan, 2024. "How does optimizing the business environment affect the capital flows between northern and southern China? From the perspective of enterprises' location choice for out-of-town investment," International Review of Financial Analysis, Elsevier, vol. 94(C).
    6. Wu, Jie & Zahoor, Nadia & Khan, Zaheer & Meyer, Martin, 2023. "The effects of inward FDI communities on the research and development intensity of emerging market locally domiciled firms: Partial foreign ownership as a contingency," Journal of Business Research, Elsevier, vol. 156(C).

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