EMPIRICAL STUDY ON CORPORATE GOVERNANCE MODES OF TIANJIN STATE- OWNED ENTERPRISES SUBJECT TO THE MIXED-OWNERSHIP REFORM - COMPARISON WITH SINGAPORE TEMASEK MODE ________________________________________________________________________ A Dissertation Submitted to the Temple University Graduate Board ________________________________________________________________________ In Partial Fulfillment of the Requirements for the Degree DOCTOR OF BUSINESS ADMINISTRATION ________________________________________________________________________ by Biao Wen May 2021 ________________________________________________________________________ Committee Members Connie X. Mao, Advisory Chair, Finance, Fox School of Business, Temple University Jonathan Scott, Finance, Fox School of Business, Temple University Xiaohui Gao Bakshi, Finance, Fox School of Business, Temple University Jun Ma, Finance, PBC School of Finance, Tsinghua University ABSTRACT Introducing private capital and employing mixed-ownership structure are effective means and inevitable choices to enhance the vitality, control and influence of state-owned economy. An effective corporate governance structure that matches the mixed-ownership reform of state-owned enterprises is the key to the success of the reform. This study suggests that the mixed-ownership reform and corporate governance practices under the Singapore Temasek mode provide China with important experience in separating government functions from enterprise management, the system of board of directors, highly independent market-oriented operation, open and diversified international employment and value-based motivation and assessment. The empirical study shows that a company's shareholding ratio of the top five shareholders, total compensation of board members, total compensation of senior officers, shareholding ratio of the board of directors, shareholding ratio of senior officers are positively related to corporate performance, while the degree of check-and-balance ownership structure, the separation of rights of chairman and general manager, and the proportion of independent directors are negatively related to corporate performance. In addition, there is a big difference in the relationship between corporate governance and corporate performance under different types of controllers. The mixed-ownership reform practice of Northern International Trust Co., Ltd. in Tianjin was analyzed as a case study. This paper presents reform suggestions on such aspects as improving the relationship between the Tianjin Municipal Government and the state-owned capital investment platform by the mixed-ownership reform, the design of the corporate governance mechanism of the state-owned capital investment platform, and the design of corporate governance of participating and holding enterprises of state-owned capital investment platform based on the case study and the experience and theoretical results of the Singapore Temasek mode. Key words: State-owned enterprises; Mixed-ownership reform; Corporate governance; Temasek; Tianjin i ACKNOWLEDGMENT My life as a doctoral student at the PBC School of Finance, Tsinghua University, ending too soon. I have gained a lot in this journey and have many people to thank for it. First, I sincerely thank my advisor, Professor Jun Ma, for his precious time and careful guidance for my thesis writing and its successful completion. I am greatly inspired by his profound knowledge, his relentless pursuit of excellence, and passion for work. Second, I thank the teachers in the PBC School of Finance for their painstaking efforts in teaching everything they know and in helping create an exceptional learning environment. Their hard work has paid off in the form of my growing knowledge and improving academic performance. I also thank my head-teacher Wen Wang for his company for his 2 years. His selfless dedication gave every student in our class a wonderful on-the-job learning experience. What I have gained from studying and living in the PBC School of Finance will last for the rest of my life. Last, I feel honored to be friends with excellent people in class. You have proved again how lucky and happy I am to be accompanied by outstanding people. Thank you for the company, family- like bond, emotional support, and joint academic progress. Graduation is yet another starting point rather than a destination. We will continue joining hands in the future. ii DEDICATION I want to thank my parents, wife, and children for the support and encouragement for my study. Thank you for the never-ending meticulous care. I spent most of my weekends and holidays in study during the past few years and spared little time for them. I thank them for their understanding and support, without which I could not have balanced my job and study. Their full support helped me devote myself to my endeavors. Thank you very much. iii TABLE OF CONTENTS ABSTRACT .............................................................................................................................................................. i ACKNOWLEDGMENT ......................................................................................................................................... ii DEDICATION ........................................................................................................................................................ iii LIST OF TABLES ................................................................................................................................................... vii LIST OF FIGURES ................................................................................................................................................ viii PART 1 CORPORATE GOVERNANCE AND OPERATING PERFORMANCE OF STATE-OWNED ENTERPRISES IN CHINA ...................................................................................................................................... 1 CHAPTER 1 BACKGROUND OF MIXED-OWNERSHIP REFORM OF STATE-OWNED ENTERPRISES ..... 1 1.1 Role of state-owned enterprises in the Chinese economy............................................................................ 1 1.2 Historical review of the reforms of state-owned enterprises ....................................................................... 1 1.3 Problems faced by state-owned enterprises ................................................................................................. 4 1.4 Purpose of mixed-ownership reform ........................................................................................................... 8 1.5 Research motives of the thesis ................................................................................................................... 10 CHAPTER 2 RESEARCH STATUS AT HOME AND ABROAD .......................................................................... 12 2.1 Concept of corporate governance .............................................................................................................. 12 2.2 Research status of mixed ownership .......................................................................................................... 13 2.2.1 Domestic research ........................................................................................................................... 13 2.2.2 Research aboard .............................................................................................................................. 23 CHAPTER 3 CONCEPTUAL MODEL AND RESEARCH HYPOTHESES ........................................................ 25 3.1 Analysis framework ................................................................................................................................... 25 3.2 Research hypotheses .................................................................................................................................. 27 CHAPTER 4 DATA AND METHODS ................................................................................................................... 32 4.1 Sample selection and data source explanation ........................................................................................... 32 4.2 Building of the research variables ............................................................................................................. 32 4.3 Data analysis method ................................................................................................................................. 34 CHAPTER 5 EMPIRICAL RESEARCH RESULTS .............................................................................................. 36 5.1 Descriptive statistics .................................................................................................................................. 36 5.2 Pearson correlation analysis on variables .................................................................................................. 38 5.3 Multiple regression analysis ...................................................................................................................... 40 PART 2 TEMASEK MODEL IN SINGAPORE: A CASE STUDY OF THE MIXED EQUITY REFORM OF TIANJIN NORTH TRUST COMPANY ................................................................................................................. 49 CHAPTER 6 CORPORATE GOVERNANCE AT HOME AND ABROAD .......................................................... 49 6.1 Temasek mode ..........................................................................................................................................