Pyramidal structure, political intervention and firms' tax burden: Evidence from China's local SOEs

Zhang, Min; Lijun, M; Zhang, Bo; Yi, Zhihong

doi:10.1016/j.jcorpfin.2015.10.004

Cited by 84 publications

(51 citation statements)

References 46 publications

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“…The political cost of government intervention is a major impediment to the efficient operation and performance of SOEs Vishny, 1994, 1998;Lin and Li, 2008;Chen et al, 2011b;Zhang et al, 2016). In a transitional economy such as China, the government has conflicting roles as a social welfare administrator and controlling shareholder of SOEs.…”

Section: Development Of Hypothesesmentioning

confidence: 99%

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

Liu

Luo

Tian

2017

Accounting & Finance

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This study examines the impact that political connections have on Mergers and Acquisitions (M&A) performance and the decisions of Chinese listed firms. We find that political connections destroy (create) value in SOEs (non-SOEs). Our findings show that connected SOEs are more likely to acquire local targets, especially when the local unemployment rate is high and when the firms are controlled by the local government, and they are less likely to conduct vertical mergers. M&A decisions of connected non-SOEs are less influenced by the government; instead, political connections in non-SOEs help bidders to integrate vertically and obtain external financing support.

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Section: Development Of Hypothesesmentioning

confidence: 99%

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

Liu

Luo

Tian

2017

Accounting & Finance

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“…On the basis of Zhang et al . (), we designate the industry‐average number of pyramidal layers as the instrumental variable (the industry‐average number of pyramidal layers is positively related to the firm's number of pyramidal layers but has a weak relationship with firm risk‐taking). In the first stage, we estimate the firm's number of pyramidal layers as a function of the industry‐average number of pyramidal layers and other control variables.…”

Section: Resultsmentioning

confidence: 99%

“…() and Zhang et al . (), our study focuses on local SOEs and excludes companies controlled by the central government, as it has less influence over SOEs than do local governments (Wang et al ., ). On the basis of these arguments, we propose the following hypothesis.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Therefore, as a measurement of the extent of government decentralization, state-pyramidal layers can alleviate the political cost of government intervention and further enhance firm risk-taking. Similar to Fan et al (2013) and Zhang et al (2016), our study focuses on local SOEs and excludes companies controlled by the central government, as it has less influence over SOEs than do local governments (Wang et al, 2008). On the basis of these arguments, we propose the following hypothesis.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…The pyramidal structure is then used to reduce government intervention and political costs due to the high intervention cost along the layers of the pyramid. Since the 1990s, a decentralized organization of SOEspyramid-like business groupshas been built, in which state assets are stripped from government agencies, spun off from parent SOEs and injected into newly established subsidiaries (Fan et al, 2013;Zhang et al, 2016). 2 Such a decentralization process has become a dominant aspect of China's SOE reform in recent years, although its effectiveness has rarely been explored.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Pyramidal structure, risk‐taking and firm value

Wan

Song

2018

Econ Transit

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This article investigates the relationship among pyramidal layers, risk‐taking and firm value using a sample of local state‐owned enterprises (SOEs) in China. We find that state‐pyramidal layers have a positive and significant impact on firm risk‐taking and firm value, suggesting that the pyramidal structure formed by the state protects SOEs from political intervention. Risk‐taking is conducive to enhancing firm value and is one of the important channels through which state‐pyramidal layers increase firm value. By exploring the role of state‐pyramidal organizational structures in improving SOEs' risk‐taking, our results contribute to both corporate governance and corporate finance literature.

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Economic policy uncertainty and enterprise strategic change: Evidence from China

Huo

Liang³

et al. 2023

Strategic Change

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A consensus in the field of strategic management is that the external environment plays a role in shaping corporate strategy. However, as an important part of the enterprise's external environment, the relationship between economic policy uncertainty and enterprise strategic change has not received due attention. Based on real options theory, principal‐agent theory, and resource‐based view (RBV), this paper empirically analyzes the impact of economic policy uncertainty on enterprise strategic change by taking A‐share listed companies in the Shanghai and Shenzhen stock exchanges from 2002 to 2020 as research samples, as well as the moderating roles of precipitation organizational slack and ownership property. The authors found that economic policy uncertainty has a restraining effect on enterprise strategic change. When economic policy uncertainty is higher, enterprises will stop and wait, and be less inclined to initiate strategic change. Precipitation organizational slack negatively moderates the relationship between economic policy uncertainty and enterprise strategic change. When enterprises have more precipitation organizational slack, it will further enhance the inhibition of economic policy uncertainty on enterprise strategic change. Ownership property positively moderates the relationship between economic policy uncertainty and enterprise strategic change. When the enterprise is a state‐owned enterprise, it will further weaken the inhibition effect of economic policy uncertainty on enterprise strategic change.

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Pyramidal structure, political intervention and firms' tax burden: Evidence from China's local SOEs

Cited by 84 publications

References 46 publications

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

Pyramidal structure, risk‐taking and firm value

Economic policy uncertainty and enterprise strategic change: Evidence from China

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