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State‐dominant and non‐state‐dominant ownership concentration and firm performance

Author

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  • Kurt Hess
  • Abeyratna Gunasekarage
  • Martin Hovey

Abstract

Purpose - This paper aims to investigate the relationship between ownership structure and performance for a comprehensive sample of Chinese listed firms for the years 2000‐2004. In particular, the paper seeks to explore the effect of the dominance of state and private blockholders and control on firm performance. It aims to use a more differentiated approach than previous research on the subject, which has mainly focused on the effects of the pervasive state ownership on firm values. Accordingly, the main theme of the paper intends to relate to the analysis of the effects of private blockholders on firm value. Design/methodology/approach - The paper tests the ownership‐performance relationship for the state and for sub‐samples with predominantly private shareholders. The paper uses both an ordinary least squares and a two‐stage least squares analysis, which treats ownership concentration as endogenous. Findings - The paper finds evidence that large private blockholdings are to the benefit of firm value for the full sample. Conversely, for smaller samples of companies without or with very low shareholdings by the various state players, there is some evidence that large private block shareholdings might be to the detriment of firm value. Originality/value - The study contributes to the literature by presenting a more comprehensive treatment of the ownership‐performance relationship of listed firms in China. The main theme of the paper relates to ownership concentration and the effects of private blockholders on the performance of firms, in addition to the endogeneity of ownership. It also contributes by utilising the alternative ownership classification system developed by the National University of Singapore.

Suggested Citation

  • Kurt Hess & Abeyratna Gunasekarage & Martin Hovey, 2010. "State‐dominant and non‐state‐dominant ownership concentration and firm performance," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 6(4), pages 264-289, September.
    • Handle: RePEc:eme:ijmfpp:v:6:y:2010:i:4:p:264-289
    DOI: 10.1108/17439131011074440
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    3. Farman Ullah Khan & Junrui Zhang & Muhammad Usman & Alina Badulescu & Muhammad Safdar Sial, 2019. "Ownership Reduction in State-Owned Enterprises and Corporate Social Responsibility: Perspective from Secondary Privatization in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    4. Kubo, Katsuyuki & Phan, Huu Viet, 2019. "State ownership, sovereign wealth fund and their effects on firm performance: Empirical evidence from Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    5. Wang, Caiping & Xu, Honggang, 2014. "The role of local government and the private sector in China's tourism industry," Tourism Management, Elsevier, vol. 45(C), pages 95-105.
    6. Vu, Loan T. & Vu, Anh T. H. & Nguyen, Thao T. P., 2021. "Impacts of Capital Structure and Dividend Policy on the Financial Performance of Listed Companies on Vietnamese Stocks Market," OSF Preprints u8pd9, Center for Open Science.
    7. Mingfeng Tang & Grace Walsh & Daniel Lerner & Markus A. Fitza & Qiaohua Li, 2018. "Green Innovation, Managerial Concern and Firm Performance: An Empirical Study," Business Strategy and the Environment, Wiley Blackwell, vol. 27(1), pages 39-51, January.
    8. Dilesha Nawadali Rathnayake & Diby Francois Kassi & Pierre Axel Louemb & Gang Sun & Ding Ning, 2019. "Does Corporate Ownership matter for Firm Performance? Evidence from Chinese Stock Exchanges," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 96-107.
    9. Anna P. I. Vong & Duarte Trigueiros, 2014. "Reversal in the relative performance of state- and legal person-owned companies during the Chinese split share structure reform," Applied Economics, Taylor & Francis Journals, vol. 46(15), pages 1728-1750, May.
    10. Wei Huang & Agyenim Boateng, 2013. "The role of the state, ownership structure, and the performance of real estate firms in China," Applied Financial Economics, Taylor & Francis Journals, vol. 23(10), pages 847-859, May.
    11. Duc Nam Phung & Anil V. Mishra, 2016. "Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 63-98, March.
    12. Haroon ur Rashid Khan & Waqas Bin Khidmat & Osama Al Hares & Naeem Muhammad & Kashif Saleem, 2020. "Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy," JRFM, MDPI, vol. 13(7), pages 1-35, July.

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