The Efficiency of State Ownership:Evidence from Listed Companies of China

Based on the effect of controlling right and shareholders’ characters,this paper has examined the efficiency of state ownership. It is found that controlling shareholders play a positive role to improve corporate performance,which shows demonstrating an ‘alignment effect’. The relationship between state ownership and corporate performance depends on the percentage of shares owned by the government and who the controlling shareholders are. When ownership concentration is low,there exists a mechanism of checks and balance of power between state ownership and other shareholders,which shows the phenomenon of ‘helping hand’ with a positive effect on corporate performance. When the ratio of state shareholding reaches a certain level and become controlling shareholder,however,government intervention increases and an increase in state shareholding has a negative effect on corporate performance,which shows ‘grabbing hand’. The findings and conclusion in this study have consequential implications to the reform of state-owned companies.