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The Rise of SASAC: Asset Management, Ownership Concentration, and Firm Performance in China's Capital Markets

Published online by Cambridge University Press:  02 February 2015

Junmin Wang ,
Doug Guthrie  and
Zhixing Xiao
Junmin Wang
Affiliation:
University of Memphis, USA
Doug Guthrie
Affiliation:
George Washington University, USA
Zhixing Xiao
Affiliation:
China European International Business School, China
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Abstract

Since the mid 1990s the State-Owned Assets Supervision and Administration Commission (SASAC) has emerged as a key institution governing firm ownership in China, but its impact on firm performance is understudied. Through an analysis of Chinese firms listed on the Shanghai and Shenzhen stock exchanges from 1994-2003, we examine how the changing ownership patterns following the rise of SASAC influenced firm performance. We have three findings. First, contrary to the popular view that state ownership in China's listed firms has declined, we find that the state shares have been moved from the original state offices to the SASAC in the format of ‘state institutional shares’. Second, compared with the old state shares, the SASAC institutions affect firm performance more positively. Third, after controlling for state and SASAC ownership, ownership concentration is a strong positive factor in firm performance. Our findings fit squarely within a long tradition of agency theorists who argue that ownership concentration helps solve the free-rider problem and thus has positive effects on firm performance. However, we focus on the ways in which ownership concentration allows firm owners to monitor and stabilize firm behaviour, which has more important implications for emerging economies such as China's domestic capital markets.

Keywords

China's capital marketsChinese SOEsfirm performancegradualismownership concentration中国的资本市场中国的国有企业企业绩效渐进±义所有权集中
Type
Articles
Information
Management and Organization Review , Volume 8 , Issue 2 , July 2012 , pp. 253 - 281
Copyright
Copyright © International Association for Chinese Management Research 2012

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