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The efficiency and profitability effects of China's modern enterprise restructuring programme

Gongmeng Chen (Antai School of Management, Shanghai Jiaotong University, Shanghai, China)
Michael Firth (Lingnan University, Tuen Mun, New Territories, Hong Kong)
Wei Wei Zhang (Industrial and Commercial Bank of China, Guangzhou, China)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 16 May 2008

Abstract

Purpose

In the mid‐1990s, China introduced the Modern Enterprise System (MES) to selected state‐owned enterprises (SOE). The paper aims to examine whether this reform led to improved efficiency and profitability.

Design/methodology approach

The efficiency and performance of enterprises before and after the economic restructuring are examined. Univariate and multivariate (regression) analyses are used to investigate whether there has been a significant change in an enterprise's performance.

Findings

The paper finds there is no improvement in efficiency and profitability after the restructuring. This can be attributed the lack of improvement to the state's ownership of enterprises, bureaucratic management, and poor corporate governance. These things have to change in order to improve corporate efficiency and performance.

Originality/value

China's reform of SOEs is very important to the economic well‐being of the country. This paper is the first to investigate the MES as applied to wholly state‐owned enterprises.

Keywords

Citation

Chen, G., Firth, M. and Wei Zhang, W. (2008), "The efficiency and profitability effects of China's modern enterprise restructuring programme", Asian Review of Accounting, Vol. 16 No. 1, pp. 74-91. https://doi.org/10.1108/13217340810872481

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited