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

PhD ceremony: Mr. H. Yu, 14.45 uur, Academiegebouw, Broerstraat 5, Groningen

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

Promotor(s): prof. R. Lensink, prof. H. van Ees

Faculty: Economics and Business

 

The thesis contributes to the literature on transition and business groups in several ways. Our 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. Our 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, we find that state-owned group affiliates and private group affiliates both outperform state-owned stand-alone firms. In this respect, our 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 our view, the most interesting outcome is that state-controlled group firms outperform private stand-alone firms. Our 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.