The Definition of Mixed Ownership Enterprise, the Relevance Of

View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by OpenGrey Repository The Emergence of China’s Mixed Ownership Enterprises and Their Corporate Governance A thesis submitted for the degree of Doctor of Philosophy By Wenkui ZHANG School of Social Sciences Department of Economics and Finance Brunel University London, UK March 2011 © 2011 by Wenkui ZHANG All right reserved Abstract Over the last three decades of the Chinese economic reform with a focus on the state-owned enterprises (SOEs) restructuring, one striking phenomenon is the rise of the mixed ownership enterprises (MOEs) in China. The objective of this thesis is to analyse the factors that can explain the emergence and the rise of the MOEs, to explore the corporate governance of the MOEs, and to assess the performance of the MOEs. The research finds that the unique experiments and practices of China’s SOEs reform in the past 30 years have formed the China Model of SOEs reform, China’s mixed ownership has its roots in the China Model. One major explanation to the rise of the MOEs is the synergy effect gained from the combination of the different advantages of both the private enterprises and the state enterprises. The private enterprises have better operational mechanisms and the state enterprises have better access to business resources and political support. The thesis has looked at 5 issues of the institutional arrangements of MOE’s corporate governance, named as the SCORE. It is found that the largest shareholder in most of the MOEs is still the state, but the control structure is not always corresponding to the shareholding structure, and the governmental intervention in the business of the MOEs has been reduced although the reduction is limited. The thesis shows that there is no noted relationship between corporate performance and mixed ownership, but the transfer of corporate controlling powers is very important for the ownership-transformed companies from whole ownership to mixed ownership to improve the performance. On this basis, the thesis argues that China needs to push forward the further commercialization of the corporate governance of the MOEs in the future. Acknowledgements I am very grateful to those people who encouraged, assisted, and guided me to take the PhD program at Brunel University and to do this research. I am thankful to Professor Guy Liu and Professor John Bennett, my supervisors at Brunel University, for their encouragement and guidance to help this research. This thesis employed lots of empirical data from field surveys. I appreciate very much the assistance from the officials of some government agencies, especially the State Assets Supervision and Administration Commission (SASAC) of the State Council and local SASACs, from the presidents and managers of some enterprises, their warm welcome on my visits and my discussions with them during the interviews are very beneficial to my studies. I am very grateful to my wife, Wei ZHANG, her support is very encouraging to me. Without her support, it would not have been possible for me to have this thesis finished. Contents Contents ............................................................................................................................................I List of Tables................................................................................................................................... V List of Figures ................................................................................................................................VI List of Abbreviations.....................................................................................................................VII Chapter 1.......................................................................................................................................... 1 Introduction...................................................................................................................................... 1 1.1 Why Should the Mixed Ownership Enterprises in China Be Taken As an Important Research Object........................................................................................................1 1.2 The Definition of the Mixed Ownership Enterprise in This Thesis .................................5 1.3 Research Objective...........................................................................................................5 1.4 Research Methodology and Research Plan ......................................................................7 1.5 The Justification and Discussion of the Methodology ......................................................10 1.6 The Structure of This Thesis ..........................................................................................14 Chapter 2........................................................................................................................................ 17 Literature Review........................................................................................................................... 17 2.1 Introduction....................................................................................................................17 2.2 The Chinese Literature on the Ownership Reform of State-Owned Enterprises............18 2.2.1 The Early Studies on the Ownership Reform of State-Owned Enterprises........... 18 2.2.2 The Early Studies on Mixed Ownership ............................................................ 23 2.2.3 The Latter Studies on Mixed Ownership............................................................ 25 2.3 The English Literature on Ownership Theory and Mixed Ownership ...........................27 2.3.1 Literature on Ownership Theory ........................................................................ 27 2.3.2 Literature on Mixed Ownership ......................................................................... 29 2.3.3 Literature on Public-Private Partnership ............................................................ 31 2.3.4 The Empirical Studies on Mixed Ownership Enterprises................................... 33 2.4 Literature on Corporate Governance..............................................................................34 2.4.1 An Overview of Corporate Governance............................................................. 34 2.4.2 Shareholding Structure and Corporate Governance ........................................... 37 2.4.3 Ownership Attribute and Corporate Governance ............................................... 39 2.4.4 The Corporate Governance of Mixed Ownership Enterprises .............................. 44 2.5 Concluding Remarks......................................................................................................46 Chapter 3........................................................................................................................................ 48 The China Model of State-Owned Enterprises Reform and the Emergence of the Mixed Ownership Enterprises ................................................................................................................... 48 3.1 Introduction....................................................................................................................48 I 3.2 The Formation of the China Model of State-Owned Enterprises Reform......................50 3.2.1 The Radical Reform in the Control of State-Owned Enterprises ....................... 50 3.2.2 The Gradual Ownership Reform ........................................................................ 56 3.3 Defining the China Model..............................................................................................62 3.4 Mixed Ownership Is Rooted in the China Model...........................................................65 3.5 Why Did the China Model Occur the Way It Did? ........................................................66 3.6 Concluding Remarks......................................................................................................71 Chapter 4........................................................................................................................................ 72 The Commonness Degree of the Mixed Ownership in China and the Mixture Degree................. 72 4.1 Introduction....................................................................................................................72 4.2 The Conditions in Some Localities ................................................................................73 4.3 The Questionnaire Survey and Data Analysis................................................................74 4.4 The Commonness Degree and Mixture Degree of China’s Listed Companies..............82 4.5 The Recent Development of Mixed Ownership in China ..............................................96 4.6 Concluding Remarks......................................................................................................99 Chapter 5...................................................................................................................................... 100 The Major Factors Driving the Emergence of the Mixed Ownership Enterprises ....................... 100 5.1 Introduction..................................................................................................................100 5.2 The Horizontal Economic Alliance and the Origin of Mixed Ownership....................101 5.3 The Ownership Reform of State-Owned Enterprises and the Rise of Mixed Ownership

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