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Productivity Improvement from the Mixed-Ownership Reform: A Financial Frictions Perspective

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  • Fusheng Xie

    (Business School, Tianhua College, Shanghai Normal University, Shanghai 201815, China)

Abstract

How to raise productivity level has become the core issue of ensuring China’s sustained Economic Growth in the Future. The mixed-ownership has both the financing advantage of the SOEs and the competitive ability of the Private firms, which can improve the governance of the firms. This paper builds a model based on the financial frictions literature, and studies the process of the mixed-ownership reform. The main results include: 1. On average, the mixed-ownership reform enhances the performance of the firms; 2. The relationship between the share of state ownership—full privatization, state-ownership, or mixed-ownership—and the performance depends on both the productivity and the restriction of financing; 3. When production efficiency is low, privatization works best; when production efficiency is medium, partial privatization works best; when production efficiency is high, nationalization works best; 4. Our model explain the puzzle of state-owned equity ratio and performance.

Suggested Citation

  • Fusheng Xie, 2023. "Productivity Improvement from the Mixed-Ownership Reform: A Financial Frictions Perspective," Sustainability, MDPI, vol. 15(2), pages 1-20, January.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:2:p:1127-:d:1027845
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    References listed on IDEAS

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    Cited by:

    1. Raminta Vaitiekuniene & Kristina Sutiene & Bohdan Kovalov & Rytis Krusinskas, 2024. "Does the Financial and Innovation Performance of European and Asian–Oceanian Companies Coincide with the Targets of the Green Deal?," Sustainability, MDPI, vol. 16(4), pages 1-18, February.
    2. Saifullah Khan & Adnan Shoaib, 2024. "Firm value adjustment speed through financial friction in the presence of earnings management and productivity growth: evidence from emerging economies," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

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