The helping hand, the lazy hand, or the grabbing hand? Central vs. local government shareholders in publicly listed firms in China

Yan-Leung Cheung, Raghavendra Rau and Stouraitis Aris

No 2008-11, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: We analyze related party transactions between Chinese publicly listed firms and their stateowned enterprise (SOEs) shareholders to examine whether companies benefit from the presence of government shareholders and politically connected directors appointed by the government. We find that related party transactions between firms and their government shareholders seem to result in expropriation of the minority shareholders in firms controlled by local government SOEs or with a large proportion of local government affiliated directors on their board, and in provinces where local government bureaucrats are less likely to be prosecuted for misappropriation of state funds. On the other hand, firms controlled by the central government (or with a large proportion of central government affiliated directors) are benefited in their related party transactions with their central government SOEs.

Keywords: Law and economics; Government ownership; China; State-Owned Enterprises (SOE); Related party transactions; Political connections (search for similar items in EconPapers)
JEL-codes: G15 G34 K33 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-04
New Economics Papers: this item is included in nep-cdm, nep-cfn, nep-cna, nep-dev, nep-law, nep-pbe and nep-tra
Note: February 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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