China and the World Economy Research Paper 2009 / 05 The More the Better ? Foreign Ownership and Corporate Performance in China
نویسندگان
چکیده
We examine the relationship between the degree of foreign ownership and performance of recipient firms, using of panel of 21,582 Chinese firms over the period 2000-2005. We find that joint-ventures perform better than wholly foreign owned and purely domestic firms. Although productivity and profitability initially rise with foreign ownership, they start declining once foreign ownership reaches beyond 64%. This suggests that some domestic ownership is necessary to ensure optimal performance. We rationalize these findings with a model of a joint-venture, where strategic interactions between a foreign and a domestic owner’s inputs may lead to an inverse U-shaped ownership-performance relationship. JEL Classification: F2, G32, L25, O5
منابع مشابه
The more the better? Foreign ownership and corporate performance in China
Using a panel of 21,582 Chinese firms over the period 2000-2005, we examine the relationship between the degree of foreign ownership and corporate performance in recipient firms. We find that foreign ownership is positively associated with firms’ return on assets, return on sales, labor productivity, and total factor productivity. Yet, the relationship exhibits an inverted U-shaped pattern: cor...
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