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The Rise of SASAC: Asset Management, Ownership Concentration, and Firm Performance in China's Capital Markets

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  • Wang, Junmin
  • Guthrie, Doug
  • Xiao, Zhixing

Abstract

Since the mid 1990s the State-Owned Assets Supervision and Administration Commission (SASAC) has emerged as a key institution governing firm ownership in China, but its impact on firm performance is understudied. Through an analysis of Chinese firms listed on the Shanghai and Shenzhen stock exchanges from 1994-2003, we examine how the changing ownership patterns following the rise of SASAC influenced firm performance. We have three findings. First, contrary to the popular view that state ownership in China's listed firms has declined, we find that the state shares have been moved from the original state offices to the SASAC in the format of ‘state institutional shares’. Second, compared with the old state shares, the SASAC institutions affect firm performance more positively. Third, after controlling for state and SASAC ownership, ownership concentration is a strong positive factor in firm performance. Our findings fit squarely within a long tradition of agency theorists who argue that ownership concentration helps solve the free-rider problem and thus has positive effects on firm performance. However, we focus on the ways in which ownership concentration allows firm owners to monitor and stabilize firm behaviour, which has more important implications for emerging economies such as China's domestic capital markets.

Suggested Citation

  • Wang, Junmin & Guthrie, Doug & Xiao, Zhixing, 2012. "The Rise of SASAC: Asset Management, Ownership Concentration, and Firm Performance in China's Capital Markets," Management and Organization Review, Cambridge University Press, vol. 8(2), pages 253-281, July.
  • Handle: RePEc:cup:maorev:v:8:y:2012:i:02:p:253-281_00
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    Cited by:

    1. Estrin, Saul & Meyer, Klaus E. & Nielsen, Bo B. & Nielsen, Sabina, 2016. "Home country institutions and the internationalization of state owned enterprises: A cross-country analysis," Journal of World Business, Elsevier, vol. 51(2), pages 294-307.
    2. Liou, Chih-shian, 2014. "Rent-seeking at Home, Capturing Market Share Abroad: The Domestic Determinants of the Transnationalization of China State Construction Engineering Corporation," World Development, Elsevier, vol. 54(C), pages 220-231.
    3. Douglas Whitehead, 2014. "Chinese NGO–Firm Partnerships and CSR from an Institutional Perspective," Journal of Current Chinese Affairs - China aktuell, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 43(4), pages 41-74.
    4. Mai, Nhat Chi, 2020. "Impact of Residual State Ownership on Privatised Firm Performance: Evidence from Vietnamese Listed Firms," OSF Preprints j78fy, Center for Open Science.
    5. Thi-Du Hoang, 2017. "The effects of policies changes on return and volatility in Vietnamese stock market," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 69-83, January.
    6. Han Yu & Abraham Nahm & Zengji Song, 2023. "State‐owned enterprises' political capital, city administrative rank and economic resources acquisition: Empirical evidence from Chinese capital markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 28-42, January.
    7. Aguilera, Ruth & Duran, Patricio & Heugens, P.P.M.A.R. & Sauerwald, Steve & Turturea, Roxana & VanEssen, Marc, 2021. "State ownership, political ideology, and firm performance around the world," Journal of World Business, Elsevier, vol. 56(1).
    8. Barbara Krug & Alexander Libman, 2015. "Commitment to local autonomy in non-democracies: Russia and China compared," Constitutional Political Economy, Springer, vol. 26(2), pages 221-245, June.
    9. Chenhao Hu, 2023. "The dual role of state shareholders in disclosed corporate misconduct: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1732-1748, April.
    10. Da Teng & Jingtao Yi, 2017. "Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China," Frontiers of Business Research in China, Springer, vol. 11(1), pages 1-25, December.

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