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Title: Enterprise Reforms in China: The Way Forward
Contributor(s): Hovey, Martin  (author); Naughton, Tony (author)
Publication Date: 2005
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Abstract: The strategic importance of the state owned enterprises (SOE) sector to the Chinese economy cannot be underestimated and the success of SOE reform is a significant factor in China's future economic prosperity. The dilemma facing state authorities is to develop free market corporations while at the same time coping with potentially high unemployment and a range of equity and social justice issues. This paper discusses the present move to divest state holdings of listed state controlled firms and offers analysis as to the way forward within the current environment in China. Within this context, the literature is reviewed regarding various ownership types in China to determine if they contributed to the performance of listed firms. State ownership is generally negatively correlated to performance. Conversely, Legal Person ownership positively influences performance. Other forms of private ownership are generally positively correlated to performance, with institutional ownership showing significant promise. Consequently, the divesture of state ownership is recommended and could be accomplished over four tranches. The State could divest its ownership by auction to strategic investors, both domestic and foreign, and in the next tranche an auction to the broad populace through units in mutual funds. The final proposed tranche being a distribution to nationwide pension funds to support retirement schemes, which should be made on a national scale. Finally, listed firms should also issue shares as rights issues to offer present shareholders protection from dilution.
Publication Type: Conference Publication
Conference Name: FIRN Symposium - Corporate Governance: Practice, Theory and Empirical Issues, Melbourne, Australia, 21st November, 2005
Conference Details: FIRN Symposium - Corporate Governance: Practice, Theory and Empirical Issues, Melbourne, Australia, 21st November, 2005
Source of Publication: Presented at the FIRN Symposium
Field of Research (FOR): 150203 Financial Institutions (incl Banking)
150303 Corporate Governance and Stakeholder Engagement
150205 Investment and Risk Management
Socio-Economic Outcome Codes: 900102 Investment Services (excl. Superannuation)
900201 Administration and Business Support Services
919999 Economic Framework not elsewhere classified
HERDC Category Description: E2 Non-Refereed Scholarly Conference Publication
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Appears in Collections:Conference Publication
UNE Business School

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