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Party Control in China’s Listed Firms

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Abstract

Along with state shareholding and government administration, the third source of political control of Chinese listed firms is the Chinese Communist Party (CCP). Using a unique hand-collected dataset that includes party secretary information for listed firms between 2000 and 2004, we examine the existence and power of party secretaries in companies. The party secretary is the leader of the party committee and exercises the power of the CCP at firm level. Power is assessed by examining whether the party secretary concurrently holds another key management position, such as chairman or CEO, thus allowing him or her to exert influence on the managerial decisions of the firm. We find that state-owned enterprises (SOEs) and firms with many employees are more likely to have a party secretary or a powerful party secretary than are other firms. Party secretaries are more likely to have political reliability but less professionalism than CEOs and other senior managers.

Suggested Citation

  • Wei YU, 2013. "Party Control in China’s Listed Firms," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(4), pages 382-397, August.
    • Handle: RePEc:fau:fauart:v:63:y:2013:i:4:p:382-397
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    1. McNally Christopher A., 2002. "Strange Bedfellows: Communist Party Institutions and New Governance Mechanisms in Chinese State Holding Corporations," Business and Politics, De Gruyter, vol. 4(1), pages 1-26, April.
    2. 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.
    3. Sonia M. L. Wong & Sonja Opper & Ruyin Hu, 2004. "Shareholding structure, depoliticization and firm performance," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 29-66, March.
    4. McNally, Christopher A., 2002. "Strange Bedfellows: Communist Party Institutions and New Governance Mechanisms in Chinese State Holding Corporations," Business and Politics, Cambridge University Press, vol. 4(1), pages 91-115, April.
    5. Aharony, J & Lee, CWJ & Wong, TJ, 2000. "Financial packaging of IPO firms in China," Journal of Accounting Research, Wiley Blackwell, vol. 38(1), pages 103-126.
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    1. Pham, Nga & Oh, K.B. & Pech, Richard, 2015. "Mergers and acquisitions: CEO duality, operating performance and stock returns in Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 298-316.

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    More about this item

    Keywords

    Chinese Communist Party (CCP); party secretary; government intervention;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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