Who Owns and Who Should Own: A Case Study of Chinaís Listed Property Companies

Chinaís privatization programme was initiated in April 1984 through the State Economic Reform Commission for a gradual transfer of operational control and financial claims over state assets. Yet, after more than twenty yearsí reform process of privatisation, the state continues to be the controlling shareholder by holding majority of stocks in many ëprivatizedí companies. The fast-growth economy has created a favourable environment for the private economy to flourish, particularly in real estate sector that has experienced a prolonged boom since 2000. The paper examines the comparative financial performance of Chinese listed property companies in an attempt to assess influence of different ownership structures to performance. The study uses the data of all of the 52 listed property companies on Chinaís stock markets, Shanghai Stock Exchange and Shenzhen Stock Exchange, from 2000 to 2005 to investigate two issues. Initially the research identifies the ownership structure by tracing the ultimate owner, and differentiates them as State Owned Enterprises (SOE) and Private Owned Enterprises (POE). The determinants of the different ownership are also investigated. The business performance of the property companies with different ownership is further analysed and the factors such as the size, sales, efficiency in asset utilization, capital structure, productivity and managerial incentive are investigated.