Firm Performance, State Ownership, and Government Regulation: Evidence from China

Using most recent data from China, this research shows that ownership structure has a significant impact on firm performance and firm characteristics. Our results show the importance of getting to grips with government regulation. Another key finding of this paper is that China has very good economic institutions that are conductive to doing business. It is far easier to conduct business in China than the other BRIC countries. We conclude that partial privatisations of SOEs on its own is unlikely to bring huge gains in efficiency. Reforms must also include better incentives and monitoring of management. Our findings are robust and consistent to various controls, alternative measures of firm performance, and different estimation methods including quantile regression.