IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v70y2021icp159-171.html
   My bibliography  Save this article

Mixed ownership and financial investment: Evidence from Chinese state-owned enterprises

Author

Listed:
  • Wang, Hua
  • Wang, Wei
  • Alhaleh, Shadi Emad Areef

Abstract

This study empirically examines whether mixed-ownership intensity influences the level of financial investment across state-owned enterprise (SOE) samples, using the hand-collected mixed-ownership data of A-share non-financial listed SOEs from 2003 to 2018 in China. Consistent with the results of the robustness tests, we found that the greater the mixed-ownership intensity, the less the level of financial investment of non-financial SOEs. Furthermore, the cross-sectional analysis confirmed that the negative influence of the mixed-ownership intensity on the level of financial investment was more significant in firms located in the eastern region of China and firms controlled by the local government.

Suggested Citation

  • Wang, Hua & Wang, Wei & Alhaleh, Shadi Emad Areef, 2021. "Mixed ownership and financial investment: Evidence from Chinese state-owned enterprises," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 159-171.
    • Handle: RePEc:eee:ecanpo:v:70:y:2021:i:c:p:159-171
    DOI: 10.1016/j.eap.2021.02.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592621000266
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2021.02.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Guan, Jian & Gao, Zhimin & Tan, Justin & Sun, Weizheng & Shi, Fan, 2021. "Does the mixed ownership reform work? Influence of board chair on performance of state-owned enterprises," Journal of Business Research, Elsevier, vol. 122(C), pages 51-59.
    2. Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
    3. Ozgür Orhangazi, 2008. "Financialisation and capital accumulation in the non-financial corporate sector:," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 863-886, November.
    4. Demir, FIrat, 2009. "Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets," Journal of Development Economics, Elsevier, vol. 88(2), pages 314-324, March.
    5. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
    6. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    7. Yi-Hua Lin & Jeng-Ren Chiou & Yenn-Ru Chen, 2010. "Ownership Structure and Dividend Preference," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(1), pages 56-74, January.
    8. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    9. Zhang, Xiaoqian & Yu, Mingqiang & Chen, Gaoquan, 2020. "Does mixed-ownership reform improve SOEs' innovation? Evidence from state ownership," China Economic Review, Elsevier, vol. 61(C).
    10. Chen, Ruiyuan & El Ghoul, Sadok & Guedhami, Omrane & Wang, He, 2017. "Do state and foreign ownership affect investment efficiency? Evidence from privatizations," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 408-421.
    11. Philippe Aghion & John Van Reenen & Luigi Zingales, 2013. "Innovation and Institutional Ownership," American Economic Review, American Economic Association, vol. 103(1), pages 277-304, February.
    12. Wang, Qiong & Mukhopadhaya, Pundarik & Ye, Jingyi, 2020. "An evaluation of the changes in wellbeing in China – 2005 to 2015: An exploratory study," China Economic Review, Elsevier, vol. 61(C).
    13. McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
    14. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 1-36, March.
    15. Marco Pagano & Ailsa Röell, 1998. "The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 187-225.
    16. Brown, Lawrence D. & Caylor, Marcus L., 2006. "Corporate governance and firm valuation," Journal of Accounting and Public Policy, Elsevier, vol. 25(4), pages 409-434.
    17. Zengji Song & Abraham Y. Nahm & Zongyi Zhang, 2017. "Partial State Ownership, Political Connection, and Financing: Evidence from Chinese Publicly Listed Private Sector Enterprises," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(3), pages 611-628, March.
    18. Boisot, Max & Meyer, Marshall W., 2008. "Which Way through the Open Door? Reflections on the Internationalization of Chinese Firms," Management and Organization Review, Cambridge University Press, vol. 4(3), pages 349-365, November.
    19. Chung-Hua Shen & Jun-Guo Shi & Yu-Li Huang, 2017. "Credit Ratings and Bank Affiliation to Financial Holding Companies: Effects of Government Ownership and Financial Crisis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(5), pages 1045-1071, May.
    20. Jiang Hai & Huang Min & James R. Barth, 2018. "On Foreign Shareholdings and Agency Costs: New Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2815-2833, September.
    21. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    22. Guedhami, Omrane & Pittman, Jeffrey A. & Saffar, Walid, 2009. "Auditor choice in privatized firms: Empirical evidence on the role of state and foreign owners," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 151-171, December.
    23. Kusnadi, Yuanto & Yang, Zhifeng & Zhou, Yuxiao, 2015. "Institutional development, state ownership, and corporate cash holdings: Evidence from China," Journal of Business Research, Elsevier, vol. 68(2), pages 351-359.
    24. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    25. Jing Zhou & On Kit Tam & Wei Lan, 2015. "Are Investor Protection and Ownership Concentration Substitutes in Chinese Family Firms?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(2), pages 432-443, March.
    26. Engelbert Stockhammer & Lucas Grafl, 2010. "Financial Uncertainty and Business Investment," Review of Political Economy, Taylor & Francis Journals, vol. 22(4), pages 551-568.
    27. Ginka Borisova & William L. Megginson, 2011. "Does Government Ownership Affect the Cost of Debt? Evidence from Privatization," Review of Financial Studies, Society for Financial Studies, vol. 24(8), pages 2693-2737.
    28. Max Boisot & Marshall W. Meyer, 2008. "Which Way through the Open Door? Reflections on the Internationalization of Chinese Firms," Management and Organization Review, The International Association for Chinese Management Research, vol. 4(3), pages 349-365, November.
    29. Engelbert Stockhammer, 2005. "Shareholder value orientation and the investment-profit puzzle," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(2), pages 193-215.
    30. Hongmei Wang & Jun Wu & Yuhong Yang & Ruihai Li & Yuping Liu, 2019. "Ownership Concentration, Identity and Firm Performance: Evidence from China’s Listed Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(15), pages 3653-3666, December.
    31. Wang, Qian & Wong, T.J. & Xia, Lijun, 2008. "State ownership, the institutional environment, and auditor choice: Evidence from China," Journal of Accounting and Economics, Elsevier, vol. 46(1), pages 112-134, September.
    32. Yan Dong & Zhentao Liu & Zhe Shen & Qian Sun, 2014. "Political Patronage and Capital Structure in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(3), pages 102-125, May.
    33. Boubakri, Narjess & Guedhami, Omrane & Kwok, Chuck C.Y. & Wang, He (Helen), 2019. "Is privatization a socially responsible reform?," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 129-151.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiang, Pengcheng & Jiang, Hongli & Wu, Jiahui, 2022. "Is inhibition of financialization the sub-effect of the green credit policy? Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    2. Li, Mengzhe & Lin, Qianru & Lan, Fei & Zhan, Zhimin & He, Zhongshi, 2023. "Trade policy uncertainty and financial investment: Evidence from Chinese energy firms," Energy Economics, Elsevier, vol. 117(C).
    3. Wang, Wei & Wang, Hua & Wu, Ji (George), 2021. "Mixed ownership reform and corporate tax avoidance: Evidence of Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    4. Liu, Xing & Liu, Fengzhong, 2022. "Environmental regulation and corporate financial asset allocation: A natural experiment from the new environmental protection law in China," Finance Research Letters, Elsevier, vol. 47(PA).
    5. Wang, Wei & Cheng, Sijia & Nahar, Shamsun & Alhaleh, Shadi Emad Areef & Wang, Hua, 2022. "Does mixed-ownership reform restrain stock price synchronicity? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 390-404.
    6. Wang, Jinbo & Ran, Maosheng & Huang, Qing & Li, Wanli, 2022. "Nationalization of private enterprises and default risk: Evidence from mixed-ownership reform in China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 534-553.
    7. Fusheng Xie & Peixiang Yang, 2023. "Research on the Impact of Mixed Reform of State-Owned Enterprises on Enterprise Performance—Based on PSM-DID Method," Sustainability, MDPI, vol. 15(4), pages 1-27, February.
    8. Manh Hoang Nguyen & Thi Quy Vo, 2022. "Residual State Ownership and Firm Performance: A Case of Vietnam," JRFM, MDPI, vol. 15(6), pages 1-28, June.
    9. Yu Gong & Seung Uk Choi, 2021. "State Ownership and Accounting Quality: Evidence from State-Owned Enterprises in China," Sustainability, MDPI, vol. 13(15), pages 1-17, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Wei & Wang, Hua & Wu, Ji (George), 2021. "Mixed ownership reform and corporate tax avoidance: Evidence of Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    2. Wang, Wei & Cheng, Sijia & Nahar, Shamsun & Alhaleh, Shadi Emad Areef & Wang, Hua, 2022. "Does mixed-ownership reform restrain stock price synchronicity? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 390-404.
    3. He, Yan & Chiu, Yung-ho & Zhang, Bin, 2015. "The impact of corporate governance on state-owned and non-state-owned firms efficiency in China," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 252-277.
    4. Zhang, Xiaoqian & Yu, Mingqiang & Chen, Gaoquan, 2020. "Does mixed-ownership reform improve SOEs' innovation? Evidence from state ownership," China Economic Review, Elsevier, vol. 61(C).
    5. Boubakri, Narjess & Guedhami, Omrane & Saffar, Walid, 2016. "Geographic location, foreign ownership, and cost of equity capital: Evidence from privatization," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 363-381.
    6. Omrane Guedhami & Jeffrey A. Pittman & Walid Saffar, 2014. "Auditor Choice in Politically Connected Firms," Journal of Accounting Research, Wiley Blackwell, vol. 52(1), pages 107-162, March.
    7. Xinyu Yu & Ping Wang, 2020. "Government control and the value of cash: evidence from listed firms in China," Review of Quantitative Finance and Accounting, Springer, vol. 55(4), pages 1341-1369, November.
    8. Guedhami, Omrane & Pittman, Jeffrey A. & Saffar, Walid, 2009. "Auditor choice in privatized firms: Empirical evidence on the role of state and foreign owners," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 151-171, December.
    9. Boubakri, Narjess & El Ghoul, Sadok & Guedhami, Omrane & Megginson, William L., 2018. "The market value of government ownership," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 44-65.
    10. Liang, Quanxi & Li, Donghui & Gao, Wenlian, 2020. "Ultimate ownership, crash risk, and split share structure reform in China," Journal of Banking & Finance, Elsevier, vol. 113(C).
    11. Oleksandr Talavera & Shuxing Yin & Mao Zhang, 2022. "Political motives of excess leverage in state-owned firms," Discussion Papers 22-04, Department of Economics, University of Birmingham.
    12. Reena Aggarwal & Isil Erel & René Stulz & Rohan Williamson, 2010. "Differences in Governance Practices between US and Foreign Firms: Measurement, Causes, and Consequences," NBER Chapters, in: Corporate Governance, National Bureau of Economic Research, Inc.
    13. Zhi Wang & Miao Yu, 2022. "Political embeddedness and firms' growth," Kyklos, Wiley Blackwell, vol. 75(1), pages 127-153, February.
    14. Ding, Xiaoya & Guedhami, Omrane & Ni, Yang & Pittman, Jeffrey A., 2020. "Local and foreign institutional investors, information asymmetries, and state ownership," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    15. Grosfeld, Irena, 2009. "Large shareholders and firm value: Are high-tech firms different?," Economic Systems, Elsevier, vol. 33(3), pages 259-277, September.
    16. Hamdi Ben‐Nasr & Narjess Boubakri & Jean‐Claude Cosset, 2012. "The Political Determinants of the Cost of Equity: Evidence from Newly Privatized Firms," Journal of Accounting Research, Wiley Blackwell, vol. 50(3), pages 605-646, June.
    17. Boubakri, Narjess & El Ghoul, Sadok & Guedhami, Omrane & Hossain, Mahmud, 2020. "Post-privatization state ownership and bank risk-taking: Cross-country evidence," Journal of Corporate Finance, Elsevier, vol. 64(C).
    18. Qi, Yong & Yang, Yudi & Yang, Shuo & Lyu, Simeng, 2021. "Does government funding promote or inhibit the financialization of manufacturing enterprises? Evidence from listed Chinese enterprises," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    19. Piotroski, Joseph D. & Zhang, Tianyu, 2014. "Politicians and the IPO decision: The impact of impending political promotions on IPO activity in China," Journal of Financial Economics, Elsevier, vol. 111(1), pages 111-136.
    20. Jian Zhang, 2018. "Public Governance and Corporate Fraud: Evidence from the Recent Anti-corruption Campaign in China," Journal of Business Ethics, Springer, vol. 148(2), pages 375-396, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:70:y:2021:i:c:p:159-171. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.