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Article

Hongyan Yang, H. Kevin Steensma and Ting Ren

This paper aims to study how state ownership influences the innovation process in terms of allocating resources toward searching for new solutions and converting these…

Abstract

Purpose

This paper aims to study how state ownership influences the innovation process in terms of allocating resources toward searching for new solutions and converting these efforts into economic value. On one hand, deep pockets of the state provide slack resources that may facilitate risk taking and innovation. On the other hand, soft budgets can create incentive problems and dampen the efficient use of resources. The authors suggest how accounting for competitive context can disentangle these countervailing forces.

Design/methodology/approach

The authors use a panel of over 240,000 Chinese firms over the years 2004–2008. The broad sample and period afforded substantial variability in terms of state ownership within and across firms. The authors use a two-stage model and a within-firm (i.e. fixed-effects) design, controlling for all time-invariant firm characteristics and the problematic unobserved heterogeneity that can often lead to erroneous inferences. Furthermore, the relatively short window limits the likelihood of time-varying unobserved firm characteristics biasing the empirical results.

Findings

The authors found that private-sector competition has the opposite effect on the relationship between state ownership and the second step of the innovation process. In industries where there is robust private-sector competition, state ownership diminishes the firm’s ability to convert R&D efforts into economic value. Private-sector competition competes away any advantages state-owned firms may have in terms of developing or accessing the complementary resources needed for commercialization. Ultimately, the inefficiencies of state ownership in terms of relatively undisciplined selection and monitoring of R&D activities outweigh any potential resource advantages derived from state ownership.

Originality/value

The state remains a prominent player in many economies throughout the world. The authors explored how state ownership of firms influences the resources they expend in searching out new solutions, and their success in converting such resources into economically valuable new products and services. State ownership has potentially countervailing effects on innovation. The authors disentangle these countervailing effects through consideration of how accounting for competitive context could determine whether the beneficial effects of state ownership dominate its detrimental effects for both searching for new solutions and converting these efforts into economically valuable new products. With a focus of market competition as an external force that drives the difference in innovation between SOEs and the private-sector, this study serves as a parallel effort to Jia et al. (2019) who investigate the joint effect of public and corporate governance on SOEs’ innovation performance, and Zhou et al. (2017) who concern the balance of the institution and efficiency logics on the comparative advantage of SOEs over privately owned enterprises in innovation performance.

Details

Competitiveness Review: An International Business Journal , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1059-5422

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Article

Hamid Hosseini

According to the late Maxime Rodinson, there exists a basic affinity between the economic scheme of Islam and the capitalist system. Although most Muslims, including…

Abstract

According to the late Maxime Rodinson, there exists a basic affinity between the economic scheme of Islam and the capitalist system. Although most Muslims, including pro‐capitalist ones, like to think of Islam as a unique way of life and one distinguished from both capitalism and socialism, there exist various Muslims who, like Rodinson, find important similarities between Islam and capitalism. One such similarity concerns private ownership of property and the means of production. According to Zubair Hassan of India, “Islam, like capitalism, permits private ownership of property including the means of production and grants freedom of enterprise”.

Details

International Journal of Social Economics, vol. 15 no. 9
Type: Research Article
ISSN: 0306-8293

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Article

Chun-Keung (Stan) Hoi, Jun Xiong and Hong Zou

Taking advantage of the 2008 Sichuan Great Earthquake as a natural experiment, the purpose of this paper is to examine the motives and effects of corporate donations by…

Abstract

Purpose

Taking advantage of the 2008 Sichuan Great Earthquake as a natural experiment, the purpose of this paper is to examine the motives and effects of corporate donations by focusing on how firm ownership identity as the first-order governance mechanism affects the motives and effects of disaster relief donations.

Design/methodology/approach

The authors conduct regressions and market event studies, and use matching to address the confounding effects of differences in firm characteristics.

Findings

The authors hypothesize that private firms that are better governed than state-owned enterprises (SOEs) are more likely to donate for value maximization. Consistent with this, the authors find that private firms are more likely to donate to the 2008 Sichuan earthquake and donate more than SOEs. The effects of secondary governance variables in the donation determinant models (e.g. board independence and managerial ownership) are more consistent with the value maximization argument. While short-term market reaction to donation announcement is not significant for private firms, it is lower when SOEs make a large donation. Consistent with the hypothesis, the authors find that over the 24–36 months following the donation, private donors realize a higher abnormal stock return.

Research limitations/implications

The study contributes to the debate over the merits/costs of corporate donations and helps better understand how SOEs and private firms (particularly family-owned firms) differ in their governance and financial decision-making.

Practical implications

Both managers from private firms and SOEs can use the findings of this study to better guide their donation and other philanthropic decisions.

Originality/value

This study is the first to examine both the motives and effects of corporate donations by both private and SOEs taking advantage of the 2008 Sichuan, thereby significantly extending prior related studies.

Details

China Finance Review International, vol. 10 no. 2
Type: Research Article
ISSN: 2044-1398

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Article

Guoping Liu and Jerry Sun

The purpose of this paper is to examine whether the type of ultimate controllers (i.e. private vs state) affects corporate disclosure quality and whether the relationship…

Abstract

Purpose

The purpose of this paper is to examine whether the type of ultimate controllers (i.e. private vs state) affects corporate disclosure quality and whether the relationship between the type of ultimate controllers and corporate disclosure quality is moderated by the separation of ownership and control.

Design/methodology/approach

This study employs the data of 405 Chinese listed firms in 2005. Annual reports were reviewed to collect the data including the type of ultimate owners, cash‐flow rights, and control rights; and the ratings of corporate disclosure quality were obtained from the Shenzhen Stock Exchange website. Ordered logistic regression tested the hypotheses.

Findings

It was found that corporate disclosure quality is lower for firms ultimately controlled by individuals than for firms ultimately controlled by the state. Also, the negative effect of private ultimate ownership on corporate disclosure quality is stronger for firms with high deviation of cash‐flow rights and control rights.

Practical implications

These findings suggest that privatizing state‐owned companies may increase the expropriation of minority shareholders by controlling shareholders if the privatization does not reduce the separation of cash‐flow rights from control rights. Thus, it may be necessary to strengthen the governance role of minority shareholders and constrain the divergence between cash‐flow rights and control rights of the ultimate owners when state‐owned companies are privatized.

Originality/value

This study contributes to the literature on the expropriation of minority shareholders by examining the main effect of the type of ultimate controllers and the interactive effect of ultimate ownership type and the divergence of ownership and control on corporate disclosure quality.

Details

Managerial Finance, vol. 36 no. 5
Type: Research Article
ISSN: 0307-4358

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Article

Steve O’Callaghan, John Ashton and Lynn Hodgkinson

The purpose of this paper is to investigate two related questions. First, is earnings management behaviour in private firms related to managerial ownership and if so, what…

Abstract

Purpose

The purpose of this paper is to investigate two related questions. First, is earnings management behaviour in private firms related to managerial ownership and if so, what form does the relationship take. Second, is there evidence of opportunistic earnings management behaviour in private firms.

Design/methodology/approach

This study uses univariate and multivariate (regression) methodologies to examine the association between managerial ownership and earnings management in private firms. The study employs a data set of 1,223 large private UK firms.

Findings

Evidence is presented indicating opportunistic earnings management behaviour in private firms. Specifically, firms with low managerial ownership appear to engage in more earnings management when faced with poor performance. Further, when firms report income-increasing discretionary accruals, the magnitude of abnormal accruals varies non-linearly with managerial ownership.

Research limitations/implications

This study is limited by availability of data on sample firm ownership. This study uses cross-sectional data due to these limitations. Further research could investigate the relationships between earnings management and classes of shareholders other than managers in private firms.

Practical implications

Policy implications of this work suggest that non-managing shareholders in private firms face considerable agency costs, in particular where managerial ownership is very low or very high.

Originality/value

Pervasiveness of earnings management in private firms compared to public firms is well documented in the literature. There is limited extant research on the relationship between ownership structure and earnings management in private firms. The novel aspect of this study is to present findings on the association between this behaviour, managerial ownership and firm performance in private firms.

Details

Journal of Applied Accounting Research, vol. 19 no. 4
Type: Research Article
ISSN: 0967-5426

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Article

Petra Lindfors and Niklas Hansen

New ownership types in health care of welfare states raise concerns regarding psychosocial work conditions including different control dimensions. The purpose of this…

Abstract

Purpose

New ownership types in health care of welfare states raise concerns regarding psychosocial work conditions including different control dimensions. The purpose of this paper is to investigate how job demands, control over work and control within work (CWW) were related to job satisfaction in publicly administered, private non-profit and private for-profit hospitals.

Design/methodology/approach

Questionnaire data came from employees at three hospitals; a publicly administered (n=774), a private non-profit (n=1,481) and a private for-profit (n=694) hospital. Mean-level analyses and hierarchical regressions with multiple group tests were conducted.

Findings

Demands including workload were significantly lower at the publicly administered hospital while the control dimension CWW was significantly higher. Background factors and their associations with job satisfaction differed slightly between ownership types. Attitudes to privatization were not associated with job satisfaction within any ownership type. Overall, psychosocial work characteristics, including job demands and control, were significantly associated with job satisfaction while their interactions showed no consistent associations with job satisfaction. As for the strength of the associations, no consistent differences emerged between ownership types.

Research limitations/implications

Using self-reports only, the associations between psychosocial work characteristics and job satisfaction seemed comparable across ownership types.

Practical implications

Associations between psychosocial work characteristics and job satisfaction seem comparable across ownership types. This may relate to societal demands on the structuring of costs, work and production efficiency being similar for all.

Originality/value

Contributions include researching different occupations and their attitudes to privatization and two control dimensions considered important for different ownership types.

Details

International Journal of Workplace Health Management, vol. 11 no. 5
Type: Research Article
ISSN: 1753-8351

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Article

R.G.B. Fyffe

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of…

Abstract

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

Details

International Journal of Sociology and Social Policy, vol. 3 no. 1/2
Type: Research Article
ISSN: 0144-333X

Keywords

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Article

Evelyn Lamisi Asuah and Kwaku Ohene-Asare

The purpose of this study is to examine efficiency differences among petroleum firms based on their ownership status, with the aim of helping these firms understand how…

Abstract

Purpose

The purpose of this study is to examine efficiency differences among petroleum firms based on their ownership status, with the aim of helping these firms understand how specific levels of state-ownership affects efficiency and to bring new perspective to the ownership-performance literature.

Design/methodology/approach

The study uses ten-year data (2001-2010) of 32 global petroleum firms categorized into four groups based on ownership types. The metafrontier analysis is used with the dynamic slack-based measure to estimate dynamic efficiency differences among the groups while respectively, accounting for carryover variables such as oil and gas reserves.

Findings

Fully state-owned firms outperformed private, majority and minority state-owned firms, indicating that not all types of state-owned petroleum firms are outperformed by private firms. Additionally, firms with shared ownership between state and private are seen to have a lesser comparative advantage in the industry than those with full private or state ownership.

Practical implications

Jointly owned petroleum firms should consider converting ownership to either full private or full state control. Conflict management measures should be used to handle possible conflicts between different shareholding groups.

Originality/value

This is among the first studies to sub-group state ownership into various levels to comprehensively examine specific levels of state ownership that is detrimental to the performance of petroleum firms. It is also the premier oil efficiency study to use the metafrontier framework to cater for group heterogeneity. The study treats oil and gas reserves as interconnecting variables that are not consumed only in the period for which they are discovered to ensure fair assessment.

Details

International Journal of Energy Sector Management, vol. 14 no. 2
Type: Research Article
ISSN: 1750-6220

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Article

Aleksey Anisimov, Anatoliy Ryzhenkov and Elena Menis

This study aims to clarify the scope of the legal procedure of the acquisitive prescription in Russia.

Abstract

Purpose

This study aims to clarify the scope of the legal procedure of the acquisitive prescription in Russia.

Design/methodology/approach

Dialectical method, historical method and system analysis method have been used.

Findings

The authors consistently prove the inadmissibility of applying acquisitive prescription to land plots in private, state or municipal ownership. One of the features of Russia as an emerging market economy is that, the major part of state lands is in so-called “non-delineated state ownership.” Plots included in such lands are not registered in the cadaster or transferred to particular public owners. That is why, the authors prove that the procedure of acquisitive prescription must be applied only in relation to land plots that are in non-delineated state ownership and have been occupied by citizens and legal entities for 15 years.

Originality/value

The authors propose new guarantees of the rights of private and public land owners. Clarification of the scope of the acquisitive prescription procedure will streamline the turnover of real estate in Russia.

Details

Journal of Property, Planning and Environmental Law, vol. 12 no. 1
Type: Research Article
ISSN: 2514-9407

Keywords

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Article

Dengjun Zhang and Yuquan Cang

This paper aims to investigate the impact of ownership concentration of the largest shareholder and foreign ownership on the demand for an external audit for small and…

Abstract

Purpose

This paper aims to investigate the impact of ownership concentration of the largest shareholder and foreign ownership on the demand for an external audit for small and medium-sized enterprises (SMEs) in six Latin American countries. In particular, the authors test whether foreign-owned firms (compared with domestic private-owned firms) and domestic firms with minority foreign shareholders are more likely engaged in audit assurance.

Design/methodology/approach

The authors applied the logit model to estimate the impact of ownership concentration and owner/shareholder type on audit demand, using a sample of 4,609 SMEs. The probabilities of being audited for firms in these countries are then calculated from the estimation results.

Findings

The empirical results suggest an inverse relationship between ownership concentration and audit demand only for Uruguay and Peru. However, foreign-owned firms and domestic private-owned firms with minority foreign ownership have a high probability of being audited for all sample countries.

Research limitations/implications

Policymakers in developing countries may promote foreign investments in domestic private-owned firms to improve their corporate transparency and governance.

Originality/value

This study contributes to the growing literature on the impact of ownership on audit demand by particularly focusing on foreign owners and foreign minority shareholders. The findings indicate that foreign ownership (either majority or minority) contributes to corporate transparency and business environments in emerging countries.

Details

Pacific Accounting Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0114-0582

Keywords

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