Loughborough University
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State ownership and the performance of privatised firms in China

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posted on 2022-06-08, 12:45 authored by Trien V. Le

In general, this study is about privatisation and corporate governance, examining the association between state ownership and firm performance in privatised firms. In particular, the study attempts to explain this association in two respects: the mediating impact of agency costs, and the moderating effect of debt.

The thesis presents two arguably novel theoretical approaches. First, employing agency theory to examine the association between state ownership and firm performance, it distinguishes itself by considering the role of agency costs in the ownership/performance relation. To do this, it relaxes a conventional assumption that state ownership generally has a negative impact on firm performance because it has a positive association with agency problems. Specifically, the thesis hypothesizes an ownership/performance relation without any prior expectation concerning its sign. The association between state ownership and firm performance may be mediated by agency costs, and state ownership may have a negative/positive association with firm performance because it may have a positive/negative association with agency costs.

Second, the thesis complements the strategic management literatures on the roles of ownership and capital structures by exploring interaction between state ownership, debt and firm performance. The study proposes that debt, as a source of corporate governance in the nuanced institutional context of transition economies, may moderate the association between state ownership and firm performance.

The above theoretical approaches are developed into three pairs of hypotheses that are tested with a sample of Chinese privatised firms, listed on the two stock exchanges of China (Shanghai and Shenzhen). Results show that state ownership has a positive impact on firm performance because it has a negative association with agency costs. In addition, debt is generally found to reinforce the positive association between state ownership and firm performance.

On the basis of possible power and/or efficiency influences of the Chinese government in the context of nascent Chinese institutions, findings are discussed and implications for government policy are provided. In addition, given the size and growing global importance of the Chinese economy, the study has practical significance for practitioners such as international managers and investors planning to invest in the country. In general, although the study focuses on China with her institutional features, it has been developed from an extensive strategic management literature and hence, the study may be replicated to in other transition economies.



  • Business and Economics


Loughborough University

Rights holder

© Trien Vinh Le

Publication date



A Doctoral Thesis. Submitted in partial fulfilment of the requirements for the award of the degree of Doctor of Philosophy of Loughborough University.

EThOS Persistent ID



  • en


Trevor Buck ; Amon Chizema

Qualification name

  • PhD

Qualification level

  • Doctoral

This submission includes a signed certificate in addition to the thesis file(s)

  • I have submitted a signed certificate