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Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises

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  • Jiahua Che
  • Yingyi Qian

Abstract

We study China's township-village enterprises (TVES) from an organizational perspective with a focus on governance. Unlike most previous studies, we interpret the firm boundaries of TVEs at the community level rather than the enterprise level. From this perspective, we analyze the central role that community governments play in TVE governance as an organizational response to the imperfect institutional environment of both state and market. Specifically, we show that the community government's involvement in TVEs helps overcome the problems of state predation and under-financing of private enterprises. We also explain why TVE governance leads to harder budget constraints than state-owned enterprises.

Suggested Citation

  • Jiahua Che & Yingyi Qian, 1998. "Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises," William Davidson Institute Working Papers Series 59, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:1998-59
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    References listed on IDEAS

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    Keywords

    institutions; corporate governance; community; township-village enterprises; China;
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