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Duopoly, mixed ownership, and the optimal proportion of employee stocks in state‐owned enterprises in China

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  • Junlong Chen
  • Mudi Wang
  • Yaxin Gao
  • Yuncheng Long

Abstract

We examine the optimal proportion of employee stocks in two kinds of duopoly markets: The first market includes two mixed‐ownership state‐owned enterprises (SOEs), and the second market includes one mixed‐ownership SOE and one private enterprise. We introduce the particularities of employee stock ownership plans in SOEs in China to the subjective function and cost function. We find that partial holding, full holding, or non‐holding can be optimal, and the optimal proportion depends on the types of rival firms, the efficiency gap in different kinds of shares, and employee behavioral tendencies. Moreover, the optimal proportion of employee stocks is subject to external institutional environment.

Suggested Citation

  • Junlong Chen & Mudi Wang & Yaxin Gao & Yuncheng Long, 2019. "Duopoly, mixed ownership, and the optimal proportion of employee stocks in state‐owned enterprises in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(5), pages 550-558, July.
    • Handle: RePEc:wly:mgtdec:v:40:y:2019:i:5:p:550-558
    DOI: 10.1002/mde.3025
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    Cited by:

    1. Junlong Chen & Chaoqun Sun & Jiali Liu & Yan Huo, 2021. "The optimal level of corporate social responsibility based on the duopoly model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 177-184, January.

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