External Regulation Improve the Performance of State-owned Enterprises?
Chinese micro enterprise data, this paper investigates the impact of external
regulation on SOE performance and reformation, with the establishment of SASAC
as a policy shock. First, we show that strengthening external regulation can
increase SOE profit, and the impact is mainly by scale up the production and
increasing the production efficiency. Second, strengthening external regulation
also generates a positive effect on SOE reformation, which improves the
operating performance of restructured enterprises with the fully release of
system transformation. Last, strengthening external regulation has a bigger
effect on SOE performance in the upstream sector, but it generates a greater
effect on SOE reformation in the mid-downstream sector with high market
competition. In this paper, we find that strengthening external regulation
plays a positive role in SOE reform, but in order to make a further reformation
and promote economic growth, the key lies in introducing the market competition
This paper is published in Economic Research Journal, No.10, 2016.