Ownership and Political Control: Evidence from Charter Amendments

49 Pages Posted: 31 Jul 2019 Last revised: 31 Oct 2019

See all articles by John Zhuang Liu

John Zhuang Liu

The University of Hong Kong - University of Hong Kong; The Chinese University of Hong Kong, Shenzhen

Angela Huyue Zhang

The University of Hong Kong - Faculty of Law

Date Written: July 22, 2019

Abstract

The latest debate about Chinese state owned enterprises (SOEs) revolves around whether there is a positive association between ownership and control, or whether all firms in China are similarly captured by the government. The recent Chinese Communist Party (Party)’s policy mandating all SOEs to amend their corporate charters to enhance the Party’s control has provided us with a rare opportunity to empirically investigate this question. We find that the state’s equity interest is positively correlated with an SOE’s responsiveness to the Party’s mandate, while the concentration level of nonstate owners and overseas listing are inversely related. These results show that ownership is important for the Party to exercise control over SOEs, but the Party also faces external constraints from other nonstate owners and overseas regulators and investors.

Keywords: ownership, cross-listing, charter amendment, party building, communist party

JEL Classification: K22

Suggested Citation

Liu, John Zhuang and Zhang, Angela Huyue, Ownership and Political Control: Evidence from Charter Amendments (July 22, 2019). International Review of Law and Economics, Volume 60, University of Hong Kong Faculty of Law Research Paper No. 2019/031, Available at SSRN: https://ssrn.com/abstract=3424079

John Zhuang Liu

The University of Hong Kong - University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

The Chinese University of Hong Kong, Shenzhen ( email )

Angela Huyue Zhang (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://www.angelazhang.net

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
88
Abstract Views
644
rank
333,314
PlumX Metrics