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The more the better? Foreign ownership and corporate performance in China

Sir David Greenaway (), Alessandra Guariglia () and Zhihong Yu ()

The European Journal of Finance, 2014, vol. 20, issue 7-9, 681-702

Abstract: We examine the relationship between the degree of foreign ownership and performance of recipient firms, using a panel of 21,582 Chinese firms over the period 2000-2005. We find that joint-ventures perform better than wholly foreign-owned and purely domestic firms. Although productivity and profitability initially rise with foreign ownership, they start declining once it reaches a certain point. This suggests that some domestic ownership is necessary to ensure optimal performance. We referred these findings to a model of a joint-venture, where strategic interactions between a foreign and a domestic owner's inputs may lead to an inverted U -shaped ownership-performance relationship.

Date: 2014
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Working Paper: The More the Better? Foreign Ownership and Corporate Performance in China (2009) Downloads
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