How Does Government Ownership Affect Firm Performance? Evidence from China’s Privatization Experience

Qian Sun, Wilson H. S. Tong and Jing Tong

Journal of Business Finance & Accounting, 2002, vol. 29, issue 1‐2, 1-27

Abstract: The effect of government ownership on firm performance remains a controversial issue, especially in a transitional economy like China. Government ownership is typically viewed as adversely affecting firm performance. This study of that of Mainland China’s privatization experience indicates the opposite. No matter whether it is in the form of state ownership or legal person ownership, government ownership has a positive impact on partially privatized state‐owned enterprises. However, this relationship is nonlinear and shows an inverted U‐shape. Given the situation of highly indebted, non‐performing state‐owned enterprises, we argue that too much government control is indeed bad for enterprises. But too little government ownership may not be good either. It might mean a lack of the government’s political support and business connections, which are valuable and necessary to vitalize performance.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (124)

Downloads: (external link)
https://doi.org/10.1111/1468-5957.00422

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:29:y:2002:i:1-2:p:1-27

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0306-686X

Access Statistics for this article

Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

More articles in Journal of Business Finance & Accounting from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().