Corporate Finance and State Enterprise Reform in China

45 Pages Posted: 12 Dec 2000

See all articles by Dongwei Su

Dongwei Su

Jinan University - Finance Department

Date Written: November 20, 2000


This paper uses a novel approach in addressing two puzzles in the field of corporate finance in China, where government is a major player. In addition to the traditional approach based on agency theory and information asymmetry, the paper uses the political costs approach in studying the stock dividend puzzle and rights issues puzzle. The paper finds that the extent of political interference, managerial entrenchment and institutional control affect corporate financing choices and dividend distribution decisions. The result sheds new light on improving the important corporate finance aspects of state enterprise reform in China.

Keywords: Corporate finance, dividend policy, agency costs, political costs, state enterprise reform

JEL Classification: G32, G35, O53, P21

Suggested Citation

Su, Dongwei, Corporate Finance and State Enterprise Reform in China (November 20, 2000). Available at SSRN: or

Dongwei Su (Contact Author)

Jinan University - Finance Department ( email )

Department of Finance
Jinan University
Guangzhou, Guangdong 510632

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