مالکیت سهام دولت و عملکرد بازار شرکت: شواهد از شرکت های تازه خصوصی شده چین

This research examines the relation between state equity ownership and firm market performance for China's newly privatized firms in 1994 (164 firms), 1995 (175 firms), and 1996 (252 firms). The overall results show that state ownership has a negative effect on firm value. Tobin's Q is convex with respect to state ownership, such that newly privatized firms gained capital and higher market values, with their increased size paying off in terms of stock returns. The effect of international ownership is unpredictable and domestic institutional ownership does not appear to improve performance, possibly because the latter lack proper incentives to positively influence the firm's management. The results further show that firm performance is not an important determinant of state ownership, but rather, firm size and its strategic industry status are the main determinants of the state's equity ownership in China's newly privatized firms.

China's economic reform is in its third decade and shows a great progress because of numerous reform initiatives and measures (see Goodhart and Xu, 1996). One of the most important of these is the share issue privatization (SIP) of medium- to large-size state-owned enterprises (SOEs).2 China essentially institutionalized the privatization of its SOEs with its establishment of the Shanghai Securities Exchange in 1990 and the Shenzhen Securities Exchange in 1991. At year-end 1998, 931 firms had listed shares on these exchanges, with a 1998 capitalization of Chinese renminbi yuan (RY) 5728.6 billion (approximately US$690 billion in 1998 values) and 34 million shareholders.3 This may be the strongest evidence that the market economy has taken hold in China and that economic reform has reached the point of no return. However, the majority of China's SOEs are still not privatized, although every indication shows that the Chinese government intends to privatize most of its SOEs. Are there lessons that can be learned from the past 10 years, as China continues the path of economic reform? The answer is unequivocally yes. Several researchers have studied various aspects of share issues and stock markets in China (see Chen et al., 2001, Chen et al., 2001, Ma, 1996 and Sjoo & Zhang, 2000), but one important aspect of the Chinese privatization program needs further examination—the state equity ownership in the newly privatized firms. For social, political, and economic reasons, the state retains equity ownership in most of the newly privatized firms (the range is from 0% to 88.5% in this study's sample). Two important questions arise. First, what is the effect of state equity ownership on performance of these newly privatized firms? Second, why does the government decide to hold more shares in some firms and less in others when privatizing its SOEs? This research focuses on providing answers to these relevant and important questions. First, if policymakers have clear answers, they will be better equipped when making decisions regarding future privatization of SOEs. Second, because of the unique approach of the Chinese privatization program,4 a better understanding of this type of privatization contributes to existing literature. Finance scholars who engage in privatization, ownership and performance, and transitional economy research will find this research particularly relevant. This paper examines the relation between state equity ownership and firm market performance for China's newly privatized firms in 1994 (164 firms), 1995 (175 firms), and 1996 (252 firms). Two strands of literature are relevant to this study. On the one hand, agency cost theory (Jensen & Meckling, 1976) argues that shareholders are not indistinguishable and that firm performance depends on the distribution of share ownership among managers and other outside owners. It views managers as agents that can reduce the payoffs to a firm's outside owners by acting in their self-interest, and suggests that aligning the interests of insiders with that of the outside owners via equity ownership increases the firm's value. Empirical research on agency cost theory with respect to ownership and performance has found at best weak support. For example, Demsetz and Lehn (1985), Denis and Denis (1994), and Holderness and Sheehan (1988) find no relation between managerial stockholders and firm performance. In contrast, McConnell and Servaes (1990) and Morck, Shleifer, and Vishny (1988) find a weak relation between ownership and performance, explaining between 2% and 3% of the cross-sectional variation in performance. More recently, Loderer and Martin (1997) find, using a framework of simultaneous equations, that higher managerial ownership does not lead to higher firm performance. However, better firm performance can lead to higher managerial stock ownership. Barnhart and Rosenstein (1998) find that board composition, managerial ownership, and Tobin's Q are jointly determined. This study also investigates the relation between one type of equity ownership and firm performance, although the type of equity ownership is not managerial, but state.5 This leads to the second strand of literature—property rights theory Alchian, 1961, Alchian & Demsetz, 1972, Alchian & Kessel, 1962, Williamson, 1970 and Williamson, 1969. Property rights theory examines the relation between government and private ownership and their effect on firm performance.6 It suggests that the one reason that firms with private ownership outperform those with government ownership is the nontransferability of government ownership.7 The involvement of state ownership in this study's sample can detrimentally impact performance because of well-known arguments in property rights theory, although in contrast the state holding of transferable equity can favorably impact performance (reduce agent cost) because of well-known arguments in agency theory. The uniqueness of this study is that the equity ownership type under investigation is state equity ownership, as opposed to many previous studies where equity ownership under investigation is managerial, and that the state ownership in this study is transferable equity ownership,8 as opposed to many previous studies where state ownership is nontransferable or there is simply no market for ownership (e.g., Boardman & Vining, 1989; Kim, 1981; McGire & van Cott, 1984). Performance measures used by previous researchers to compare state ownership versus private ownership are mostly accounting-based, such as return on sales (ROS), return on total assets (ROA), and return on equity (ROE), and operating efficiency measures like sales per employee or net income per employee. However, the most widely used measure in the equity and performance literature is Tobin's Q, although other measures are also used, such as stock abnormal returns related to different events (such as merger, acquisition, and hostile takeover). This study uses market-based measures, including Tobin's Q and monthly stock returns (MSR). 9 The overall results of this study show that the newly privatized firm's market performance is negatively correlated with its level of state equity ownership. This result is consistent with Boardman and Vining (1989) in the sense that state ownership has a detrimental impact on firm performance, may it be in the form of equity holding or outright ownership. This study also finds that the relation between state equity ownership and Tobin's Q is convex. One explanation is that at low state ownership, firm performance is high because of arguments in property rights theory, and at high state ownership, firm performance is also high because it can be that the state divests itself of better performing firms at a slower pace to protect its interests, including monetary interests. 10 It may also be that the government more closely monitors firms with high state shares. This possibility is consistent with Groves, Hong, McMillan, and Naughton (1995), who argue that SOEs going through a privatization process must be monitored. Their evidence further shows that Chinese bureaucratic superiors can provide reasonably effective monitoring during this transitional period. The convexity finding does not imply, in extreme cases, that a firm should either be wholly state-owned or wholly private-owned. The explanation entertained here is that the convexity finding is a unique phenomenon during this transitional period and a result of the convergence of the aforementioned two strands of literature. The finding is also consistent with McConnell and Servaes (1990), but in an inverse sense. 11 Furthermore, the empirical results show that firm's market performance is not an important determinant for state equity ownership. Instead, firm size and its strategic industry status are the main determinants of the state's equity ownership in China's newly privatized firms. The findings of this study have one main implication. State equity ownership is detrimental to firm performance. Ownership in a corporation comes with rights and obligations and monetary, profit-driven incentives to monitor the managers' decision making. However, because state equity ownership is so loosely defined, no individual representing the state ownership has real incentives to make sure that firm value is maximized. It may be suggested that state shares represent political ownership stakes with the state's main interest more political than monetary. The source of the negative effect of state shares on firm performance may come from the divergence of the political interests of the government combined with the profit motivation inherent in a typical corporation. The rest of the paper is organized as follows. Section 2 discusses corporate governance in China, whereas Section 3 describes the sample and data. Section 4 presents the methodology and hypothesis, and Section 5 the empirical results. Section 6 provides the conclusions.

The relation between state ownership and firm performance is investigated for China's newly privatized firms in 1994 (164 firms), 1995 (175 firms), and 1996 (252 firms). Two measures of firm performance are used, namely, Tobin's Q and MSR. In a single equation setting, Tobin's Q is convex with respect to state ownership, as expected, and negatively related to size, whereas stock returns are positively related to the standard deviation, as expected, and size. It appears that newly privatized firms gained capital and higher market values, and that their increased size is paying off in terms of their stock returns. These results are robust as it is also found that firm performance is not an important determinant of state ownership. Rather, firm size and its strategic industry status are the main determinants of the state's equity ownership in China's newly privatized firms. International ownership has an unpredictable effect on performance of newly privatized firms in China, and domestic institutional ownership does not appear to result in improved performance. Possibly, domestic institutional owners do not necessarily have the proper incentives to positively influence the firm's management in China as many are state-owned and managers in these paid by the state.