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Network-based state ownership and corporate resilience: Evidence from China

Author

Listed:
  • Fu, Weigang
  • Liu, Fangrui
  • Liu, Yan

Abstract

Better financial support from state shareholders may enhance corporate resilience when facing large negative shocks. We empirically test this hypothesis based on data of listed firms from Chinese , an institutional environment featuring wide state ownership, and exploit a negative macro shock for identification. We employ a new measure of state ownership, which is constructed for each firm by identifying its ultimate shareholders through its entire ownership network. The findings robustly support that state ownership contributes to firm resilience, and one channel is the better financial flexibility provided by higher state ownership.

Suggested Citation

  • Fu, Weigang & Liu, Fangrui & Liu, Yan, 2024. "Network-based state ownership and corporate resilience: Evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pb:s1544612324012285
    DOI: 10.1016/j.frl.2024.106199
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    More about this item

    Keywords

    Corporate resilience; State ownership; Ownership network; Ultimate shareholder;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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