Ownership type, business groups and corporate performance: evidence from Chinese listed firms

The thesis of Huanjun Yu contributes to the literature on transition and business groups in several ways. The findings may have implications for other countries that engage in the reform of state-owned enterprises.

First, the literature on business groups has mainly regarded group formation as a spontaneous response to market failures or a corporate strategy to establish operational and managerial synergies. Yu's results show that successful group formation can also be organized to some extent. The policy implication is that policy makers can consider group formation as an instrument to reform the large state-owned sector.

Second, Yu finds that state-owned group affiliates and private group affiliates both outperform state-owned stand-alone firms. In this respect, the results indicate the two different ways of reforming state-owned enterprises in China: group formation and privatization. Privatization is important whereas the effect of group formation is also likely to be dominant.

In Yu's view, the most interesting outcome is that state-controlled group firms outperform private stand-alone firms. The findings suggest that group formation may be a successful strategy in restructuring enterprises even without privatization of state ownership. Besides, since private business groups outperform state-owned business groups, group affiliation of state-owned firms is suboptimal in this respect. Group formation of SOEs, however, can only be considered an intermediate step to reform SOEs.

Curriculum vitae
Huanjun Yu (China, 1975) studied economics at Xiamen University in China. He conducted his PhD research at the department of economics, econometrics and finance of the FEB. Yu will be awarded his PhD in economics and business on 17 June (2.45pm). His thesis supervisors are prof.dr. R. Lensink and prof.dr. H. van Ees. The thesis title is: Ownership type, business groups and corporate performance: evidence from Chinese listed firms.