Unlocking the myths of size expansion in China's large state‐owned enterprises: Theory and evidence

Jim Huangnan Shen, Weiping Li and Chien‐Chiang Lee

Managerial and Decision Economics, 2023, vol. 44, issue 2, 1264-1284

Abstract: This research proposes a theoretical framework to illustrate the incentives behind the exponential growth in asset size of China's large state‐owned enterprises (SOEs) in the past few decades, with results presenting three types of incentives that led to their expansion. (1) The business empire building effect. (2) The state predatory effect. (3) A state benevolent effect in which the state is also concerned with “social welfare” in terms of increasing labor hiring through a larger asset size of SOEs for the sake of social stability. The empirical evidence is broadly consistent with the theories proposed herein.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:44:y:2023:i:2:p:1264-1284

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