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The costs and benefits of government control: Evidence from China's collectively-owned enterprises

Listed author(s):
  • Lu, Jiangyong
  • Tao, Zhigang
  • Yang, Zhi

China's collectively-owned enterprises are unconventional, as they are nominally owned by those people residing in the areas where the enterprises are located but effectively controlled by the local governments. This study finds that collectively-owned enterprises, once being privatized, encounter an increase in the cost of goods sold to sales ratio but manage to lower down the managerial expenses to sales ratio. The findings imply that local government officials may help collectively-owned enterprises gain access to cheaper production inputs, but they may use those enterprises to pursue private benefits, thereby shedding lights on the costs and benefits of government control.

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File URL: http://www.sciencedirect.com/science/article/pii/S1043-951X(09)00124-2
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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 21 (2010)
Issue (Month): 2 (June)
Pages: 282-292

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Handle: RePEc:eee:chieco:v:21:y:2010:i:2:p:282-292
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

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