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State ownership, political connections and entry barriers: evidence from China

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  • Meijie Yao
  • Ciheng Song
  • Zengji Song

Abstract

Private enterprises may encounter high industrial barriers in China because of government administrative restrictions. We analyse the effect of partial state ownership on a privately controlled company’s participation in industries with state-imposed barriers. The results indicate that state ownership in privately controlled enterprises has a significantly positive effect on participation in high barrier industries. After controlling for partial state ownership, we find that personal political identity of entrepreneurs, a previously investigated dimension of political connections, becomes less important in explaining private enterprises’ participation in barrier industries. We also find the effect of state ownership on access to barrier industries will become weaker when local economy is more developed.

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  • Meijie Yao & Ciheng Song & Zengji Song, 2018. "State ownership, political connections and entry barriers: evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 25(17), pages 1250-1254, October.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:17:p:1250-1254
    DOI: 10.1080/13504851.2017.1414928
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    Cited by:

    1. Qi‐an Chen & Shuxiang Tang & Yuan Xu, 2022. "Do government subsidies and financing constraints play a dominant role in the effect of state ownership on corporate innovation? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3698-3714, December.
    2. Kousik Ganguly & Ajay Kumar Mishra, 2024. "Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 23(2), pages 170-196, June.
    3. Xin Li & Qiong Xu & Fei Guo & Hecheng Wang, 2023. "State‐owned equity participation and private sector enterprises' strategic risk taking: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1107-1124, March.
    4. Feng Niu & Liuzhen Zhang & Wunhong Su, 2023. "Association between state ownership participation and the performance of private firms: Evidence from China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 979-1006, October.
    5. Baili Yang & Abraham Nahm & Zengji Song, 2022. "Succession, political resources, and innovation investments of family businesses: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 321-338, March.
    6. ARA Tomohiro & Arpita CHATTERJEE & Arghya GHOSH & ZHANG Hongyong, 2019. "Input Tariff in Oligopoly: Entry, heterogeneity, and demand curvature," Discussion papers 19066, Research Institute of Economy, Trade and Industry (RIETI).
    7. Zhu, Ruoyu & Xin, Xiaohui & Tan, Kehu, 2024. "Reverse mixed ownership reform: Does state-owned capital injection inhibit corporate leverage manipulation?," Finance Research Letters, Elsevier, vol. 59(C).

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