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Does the mixed ownership reform work? Influence of board chair on performance of state-owned enterprises

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  • Guan, Jian
  • Gao, Zhimin
  • Tan, Justin
  • Sun, Weizheng
  • Shi, Fan

Abstract

By introducing diversity of ownership interests via “mixed-ownership reform”, China seeks to alleviate internal governance problems in state-owned enterprises (SOEs), enhancing their efficiency and competitiveness. Private strategic partners invest for a large minority stake, with government typically retaining a majority share and influence. Resulting questions related to strategic leadership and corporate governance, addressed in this paper from the perspective of principal-agent theory, include: To what extent do the board chairs of SOEs affect their financial performance? How is this relationship impacted by the institutional changes induced by mixed-ownership reform? Do these effects vary between SOEs operating in competitive and monopolistic industries? Analyzing data on Shanghai- and Shenzhen-listed SOEs from 2008 to 2017 using the multilevel linear model (MLM) method, we determine that board chairs have a noticeable effect on financial performance, varying by type of SOE, and that mixed-ownership reform reduces their impact.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jbrese:v:122:y:2021:i:c:p:51-59
    DOI: 10.1016/j.jbusres.2020.08.038
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