A New Perspective on Ownership Identities in China's Listed Companies

Abstract

We introduce a new perspective on the conceptualization and measurement of ownership identities of China's listed companies. Previous work analyzing the strategy and performance implications of the ownership structure in Chinese firms has used the official categorization provided by state bodies in China. In this categorization, state shareholding, legal person shareholding and A‐shares dominate. This official categorization, however, obscures the ultimate identity of a shareholder; this can confound conceptual and empirical work on the strategy and performance implications of ownership identity. We refine the existing classification by recategorizing shareholders into 16 types, which can then be regrouped into relevant categories of shareholders, such as government or private, to enable analysis of ownership identity and ownership concentration issues in China's listed companies. Our new classification can help provide consistency in the burgeoning research on the strategy and performance implications of the concentration and identity aspects of ownership structure in China's listed companies.

Are OECD-prescribed “good corporate governance practices” really good in an emerging economy?

“…The other proxy, which does not exist in most emerging economies, is value differences among multiple classes of shares (DeAngelo & DeAngelo, 1985;Lease, McConnell, & Mikkelsen, 1984;Rydqvist, 1987). 2 Other studies that use the indirect approach include Bertrand, Mehta, and Mullainathan (2002) and Selarka (2005) on India, Song, Ali, and Pillay (2007) on Malaysia, Bae, Kang, and Kim (2002) on South Korea, Delios, Wu, and Zhou (2006) and Sheu and Yang (2005) on Taiwan, and Mitton (2002) and Lins (2003) on Indonesia, the Philippines, Sri Lanka, Thailand, and others. cash rights in the controlled affiliates (Almeida & Wolfenzon, 2006;Levy, 2009;Morck et al, 2005;.…”

“…China represents a good empirical setting to test our theory because it has all the necessary characteristics we need: a weak institutional system in terms of limited legal protection of property rights and an underdeveloped financial market (Xu & Wang, 1999), high ownership concentration of firms (Xu & Wang, 1999), co-existence of state-and privately-controlled firms (Delios et al, 2006;Xu & Wang, 1999), prevailing pyramidal control (Ma & Lu, 2005), and the adoption of a two-tier board (Dahya et al, 2003;Lin, 2004).…”

Ownership Structure and Risk-Taking: Comparative Evidence from Private and State-Controlled Banks in China

“…Unlike in the case of GCBs, the boards of directors and senior officers of SOECBs are appointed by SOE controlling shareholders rather than being directly appointed by the Organization Department of the Communist Party. Chinese SOEs have become market-oriented and responsible for their own gains and losses since the third round of reforms (Delios et al, 2006). Thus, SOE controlling shareholders are motivated to appoint good managers and to monitor them to ensure that the banks they control operate in a safe and sound manner.…”

Top executive compensation, regional institutions and Chinese OFDI

“…Thus, we controlled for state shareholding, which is calculated as the percentage of shares owned by the central government, local governments and government related agencies, to capture the effect of direct state intervention. We followed the methodology of Delios, Wu and Zhou (2006) to categorize ownership in Chinese-listed firms according to the ultimate identity of shareholders, and updated the ownership category data for the sample period. We used a dummy variable to capture the impact of the government's industrial policy towards OFDI, taking the value 1 if the industries are prioritized by the government, which encourages Chinese firms to invest in these industries abroad (zero otherwise) based on the guidance for overseas investment issued by the Chinese government (MOFCOM, 2004).…”