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A contractual analysis of state versus private ownership

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  • Jiang, Kun
  • Wang, Susheng

Abstract

We uniquely analyze the advantages and disadvantages of private ownership versus state ownership under various circumstances by focusing on three aspects: external risk, internal governance, and relative importance of owners versus managers. Our theoretical analysis indicates that private ownership is better than state ownership if the business environment is risky, corruption is limited, or the manager plays a more important role than the owner. Our empirical analysis supports our theoretical findings and reveals that better internal governance, more external risk and greater importance of the manager will magnify the benefits of privatization.

Suggested Citation

  • Jiang, Kun & Wang, Susheng, 2017. "A contractual analysis of state versus private ownership," China Economic Review, Elsevier, vol. 43(C), pages 142-168.
    • Handle: RePEc:eee:chieco:v:43:y:2017:i:c:p:142-168
    DOI: 10.1016/j.chieco.2017.01.011
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    2. Jiang, Kun & Wang, Susheng, 2022. "Internal labor markets with two types of promotion and two tiers of salary: theory and evidence from China," China Economic Review, Elsevier, vol. 72(C).
    3. Nan Zhou, 2018. "Hybrid State-Owned Enterprises and Internationalization: Evidence from Emerging Market Multinationals," Management International Review, Springer, vol. 58(4), pages 605-631, August.

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    More about this item

    Keywords

    Contractual analysis; State ownership; Private ownership; Incentives; External risks; Internal corruption;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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