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1 – 10 of over 66000Hao Liang, Luc Renneboog and Sunny Li Sun
We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as…
Abstract
Purpose
We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible “stewards” rather than “agents” of the state.
Methodology/approach
We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets.
Findings
Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform.
Research limitations/implications
Economic reform without reforming the human resources policies at the executive level enables the autocratic state to exert political power on corporate decision making, so as to ensure that firms’ business activities fulfill the state’s political objectives.
Practical implications
As a powerful social elite, the state-steward managers in China have the same interests as the state (the government), namely extracting rents that should adhere to the nation (which stands for the society at large or the collective private citizens).
Social implications
As China has been a communist country with a single ruling party for decades, the ideas of socialism still have a strong impact on how companies are run. The legitimacy of the elite’s privileged rights over private sectors is central to our question.
Originality/value
Chinese executive compensation stimulates not only the maximization of shareholder value but also the preservation of the state’s interests.
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Qi-an Chen and Anze Bao
Green transition is a long-term direction of corporate development that can achieve sustainable corporate development. This study aims to investigate whether state ownership…
Abstract
Purpose
Green transition is a long-term direction of corporate development that can achieve sustainable corporate development. This study aims to investigate whether state ownership promotes corporate green transition by mitigating managerial myopia and the impact of environmental regulations, internal controls and ownership on this pathway.
Design/methodology/approach
Using data from 2,608 Chinese listed companies for 2010–2019, the authors investigate the relationship between state ownership, managerial myopia and corporate green transition by using fixed-effects and moderated mediation models.
Findings
State ownership can boost green transitions and alleviate managerial myopia. Managerial myopia mediates the relationship between state ownership and corporate green transition. Furthermore, environmental regulations, internal controls and ownership moderate the mediating effects of managerial myopia.
Originality/value
The authors construct a multidimensional green transition index to examine the influence of state ownership on corporate green transition behavior and reveal the underlying mechanism by which state ownership promotes green transition by “mitigating managerial myopia.” This study enriches the literature on state ownership, management myopia and green transition and provides important evidence for the promotion of mixed ownership reforms.
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Applying resource dependence theory (RDT), this research paper aims to examine the effect of imbalanced trade dependence (ITD) on entry mode choices and how state ownership and…
Abstract
Purpose
Applying resource dependence theory (RDT), this research paper aims to examine the effect of imbalanced trade dependence (ITD) on entry mode choices and how state ownership and marketization each can moderate this effect.
Design/methodology/approach
Using data on 1,404 foreign projects made by 493 Chinese listed firms during the 2009–2015 period of time, this study applies logit regression to do the statistical analysis.
Findings
It finds that ITD positively affects the choice of wholly-owned subsidiaries. State ownership and marketization each can moderate this influence.
Originality/value
It develops the concept of ITD, applies it to examine entry mode choices and lets us better understand the substitutive or complementary relationship between governments and foreign firms as two sources of resources. It helps us better understand some competitive advantages of emerging market firms (EMFs) and the impacts of the state on EMFs’ outward FDI. It contributes to entry mode research by applying RDT to explain how ITD influences entry mode choices and how state ownership and marketization each can moderate this relationship.
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Asmund Rygh and Carl Henrik Knutsen
Recent international business research finds that state-owned multinational enterprises (SOMNEs) invest relatively more in politically risky host countries than do privately-owned…
Abstract
Purpose
Recent international business research finds that state-owned multinational enterprises (SOMNEs) invest relatively more in politically risky host countries than do privately-owned multinational enterprises (MNEs). This study aims to investigate theoretically and empirically whether state ownership mitigates the impact of host-country political risk on subsidiary economic risk.
Design/methodology/approach
The authors link theoretical arguments on state ownership to arguments from non-market strategy literature to outline mechanisms whereby state ownership can buffer subsidiaries from political risk, weakening the link between host-country political risk and earnings volatility in subsidiaries. Using a data set on Norwegian MNEs’ foreign subsidiaries across almost two decades, the authors test this prediction using both matching methods and panel regressions.
Findings
While standard panel regressions provide empirical support only for the infrastructure sector and for the highest political risk contexts, nearest-neighbour matching models – comparing only otherwise similar private- and SOMNE subsidiaries using the full sample – reveal more general support for the political risk mitigation hypothesis.
Originality/value
The study presents the first comprehensive analysis of whether state ownership can mitigate the effect of political risk on subsidiary economic risk.
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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 specific…
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.
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Quynh Nga Nguyen Thi, Quoc Trung Tran and Hong Phat Doan
This paper investigates how the global financial crisis changes the effects of state ownership and foreign ownership on corporate cash holdings in an emerging market.
Abstract
Purpose
This paper investigates how the global financial crisis changes the effects of state ownership and foreign ownership on corporate cash holdings in an emerging market.
Design/methodology/approach
We employ an interactive term between state ownership (foreign ownership) and a crisis dummy to analyze how the global financial crisis determines the effect of state ownership (foreign ownership) on corporate cash holdings.
Findings
With a research sample including 5,493 observations from 621 listed firms over the period 2007–2017, we find that state ownership (foreign ownership) is negatively (positively) related to corporate cash holdings and the effect of state ownership (foreign ownership) is stronger (weaker) during the crisis period. Moreover, the increase in the effect of state ownership is larger in financially unconstrained firms.
Originality/value
Prior research shows that the effects of state ownership and foreign ownership on corporate cash holdings in emerging markets are still debatable. This paper extends this line of research by investigating how the global financial crisis – an exogenous shock – changes these effects.
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Eva Liljeblom, Benjamin Maury and Alexander Hörhammer
State ownership has been common especially in industries with restricted competition. In Russia, state-controlled firms represent around 41 percent of the market value of all…
Abstract
Purpose
State ownership has been common especially in industries with restricted competition. In Russia, state-controlled firms represent around 41 percent of the market value of all listed firms (Deloitte, 2015). Yet, there is a significant gap in the literature regarding the effects of various forms of government control in listed firms. The purpose of this paper is to fill this gap by exploring the impact of the complexity of state ownership and competition on the performance of Russian listed firms.
Design/methodology/approach
The sample consists of data for 72 firms (360 firm-years) in the Russian MOEX broad market index during 2011–2015. The complexity of state ownership is captured by studying forms of state control including majority/minority, direct/indirect, federal/regional, mixed structures and golden shares.
Findings
The authors find significant differences in performance relating to different forms of state ownership. State control is negatively related to firm valuation and the sales/employees ratio. Performance is weakest when state ownership takes the form minority, regional or direct ownership. State control through golden shares typically outperforms other state-controlled firms. The authors find indications of employment prioritization beyond the economical optimum. In addition, the relation between state ownership and profitability becomes positive in sectors where state firms appear to enjoy lower competition.
Originality/value
While the effects of state ownership have been studied on many markets, there is a lack of studies on the effects of different forms, or the complexity, of state ownership beyond direct and indirect ownership. The authors contribute to the literature on the performance effects of state ownership by studying a multitude of forms of governmental ownership as well as the role of competition in Russia. Especially the profitability of state-controlled firms is significantly affected by industry characteristics. Implications of the results are discussed both from firm and policy maker perspectives.
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The purpose of this paper is to investigate the endogeneity effect of state ownership on firm value in Indonesia.
Abstract
Purpose
The purpose of this paper is to investigate the endogeneity effect of state ownership on firm value in Indonesia.
Design/methodology/approach
Using a sample of 139 Indonesian non-financial listed companies from 2009 to 2013, this study uses two-stage least square (2SLS) methods.
Findings
The results of 2SLS show that state ownership as “continuous measure, dummy variable and after adjusting the outliers” are negatively and significantly influenced firm value, implying that state ownership tends to lower firm value. Moreover, the results also show that U-shaped effect of state ownership with firm value, implying that the size of shareholders by state increases, firm value initially decreases and then increases.
Practical implications
The study intends to provide the shareholders, managers and investors with clear guidance before their investment decisions.
Social implications
This paper provides evidence that the agency costs may increase in firms with state ownership share.
Originality/value
This is the first paper contributes to the corporate governance literature by investigating the endogeneity effect between state ownership and firm value using 2SLS method in Indonesia.
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Lei Xu, Ron P. McIver, Yuan George Shan and Xiaochen Wang
The purpose of this paper is to link literature on China’s real estate sector and the impact of governance, ownership and political connectedness on firm financial performance…
Abstract
Purpose
The purpose of this paper is to link literature on China’s real estate sector and the impact of governance, ownership and political connectedness on firm financial performance. Whether these factors impact listed real estate firms differently to firms in other industry sectors is identified.
Design/methodology/approach
The paper uses pooled 2008-2013 data on A-share firms. Tobin’s Q captures firm financial performance. Explanatory variables include corporate governance, ownership, local government political connectedness, accounting data and ultimate control. Two-way interactions are estimated between real estate and ownership, governance, political connectedness and other variables. Three-way interactions are estimated between real estate, ownership, control and political connectedness. Year and industry fixed effects are absorbed.
Findings
Industry concentration and proportion of state ownership appear to positively impact performance. Firm size, gearing and greater foreign ownership appear to negatively impact performance. However, differences are identified for real estate firms, in which state control and gearing positively impact performance. Greater state and foreign ownership as well as supervisory board size negatively impact performance. Finally, state control in the presence of local government connections negatively impacts performance, while greater state ownership in the presence of local government connections positively impacts performance.
Originality/value
A lack of empirical evidence on the impact of corporate governance, ownership structures and political connectedness on firm performance in China’s real estate sector is addressed. Importantly, relationships among these factors and the financial performance of China’s listed real estate firms differ to those of firms in other industries.
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Mouna Ben Rejeb Attia, Naima Lassoued and Mohamed Chouikha
The purpose of this paper is to examine the relationship between state ownership and firm profitability in developing countries by considering the endogenous nature of state…
Abstract
Purpose
The purpose of this paper is to examine the relationship between state ownership and firm profitability in developing countries by considering the endogenous nature of state ownership and firm profitability.
Design/methodology/approach
A simultaneous equation analysis is applied to study 232 Tunisian firms over the 2001-2013 period. This analysis is compared with OLS estimates to show its power in terms of an endogenous setting and its potential to improve estimation.
Findings
Unlike the OLS estimates that show a non-significant relationship between state ownership and firm profitability, the simultaneous equation analysis reveals a non-symmetrical concave relationship. Specifically, state ownership affects positively firm profitability when it is relatively small and negatively when state ownership dominates. Specification test indicates that both state ownership and firm profitability are endogenous. Furthermore, the simultaneous model’s explanatory power exceeds that of OLS estimates and proves to be a suitable estimation technique.
Practical implications
Taking into account public firms’ categorization, the authors implicitly examine the effect of privatization and corporatization on firm profitability. The findings imply that privatization is not the only solution to the operational problems of public firms, but an internal governance system restructuring can also be favorable for these firms.
Originality/value
In addition to focusing on a new database of developing countries, the case of Tunisian firms, the main empirical analysis is conducted by considering the endogeneity issue. Thus, the findings improve understanding of the role played by state ownership and suggest that a partial state control appears to be beneficial to firm profitability.
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