Unpacking the Patterns of Corporate Restructuring during China's SOE Reform - By CWP Alumni Fellow Xiaojun Li
State owned enterprises (SOEs) in China have undergone significant restructuring since the mid-1990s. To date, scholars have devoted considerable attention to the constraints and motives of corporate restructuring in China. Yet the majority of the existing studies treat restructuring as a simple ownership transfer from the state to non-state entities without differentiating the resulting ownership structure of the firm. Consequently, we know relatively little about why otherwise similar SOEs were restructured at different times and through different means. This study intends to fill this gap by examining the determinants of both the timing and methods of restructuring in a unique longitudinal survey of 145 SOEs over an eleven-year period. Using a competing-risks model, we demonstrate that political as well as economic factors determine the possibility, nature,and speed of restructuring. In particular, we show that political constraint about worker retention increases the likelihood that an SOE will be restructured as shareholding as opposed to direct transfer of ownership to private hands. These findings shed new light on the economic and political logic of corporate restructuring in China.
Keyword: corporate restructuring; state-owned enterprise; shareholding; privatization; competing-risks model.
Xiaojun LiDepartment of Political ScienceUniversity of British Columbia
Jean C. OiDepartment of Political ScienceStanford University