IDEAS home Printed from https://ideas.repec.org/p/bbe/wpaper/0903.html
   My bibliography  Save this paper

Agency Cost of Government Ownership: A Study of Voluntary Audit Committee Formation in China

Author

Listed:
  • Charlie X. Cai
  • David Hillier
  • Gaoliang Tian
  • Qingghua Wu

    (University of Leeds - UK)

Abstract

In this paper, we investigate the agency costs of government ownership and their impact on corporate governance and firm value. China is used as a laboratory because of the prevalent state shareholdings in exchange-listed firms. In this context, we specifically consider the trade-offs involved in the voluntary formation of an audit committee when the controlling shareholder is the state. The decision to improve corporate governance (in this case, introduce an audit committee) is shown to be value relevant and a function of existing agency relationships and non-trivial implementation costs. Our findings are robust to the level of pyramid groups, the ownership-control wedge, and financial leverage. The research adds to the debate regarding the effect of government shareholdings on corporate culture and performance - a topic that has taken on renewed importance in recent times.

Suggested Citation

  • Charlie X. Cai & David Hillier & Gaoliang Tian & Qingghua Wu, 2008. "Agency Cost of Government Ownership: A Study of Voluntary Audit Committee Formation in China," Working Papers 0903, Departament Empresa, Universitat Autònoma de Barcelona, revised Feb 2009.
    • Handle: RePEc:bbe:wpaper:0903
    as

    Download full text from publisher

    File URL: http://anubis.uab.cat/servlet/BlobServer?blobtable=Document&blobcol=urldocument&blobheader=application/pdf&blobkey=id&blobwhere=1345650665134&blobnocache=true
    File Function: Revised version, 2009
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Government Owned Enterprises; Corporate Governance; Auditing; Audit Committee; Pyramid Groups.;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

    Statistics

    Access and download statistics

    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:bbe:wpaper:0903. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Departament Empresa (email available below). General contact details of provider: http://158.109.224.4/webeco/plaes/RePEc/bbe/ .

    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.