Browse/search for people

Publication - Dr Fangming Xu

    Why do Chinese local governments transfer their rights of control over SOEs to the central government?

    Citation

    Cai, W, Xu, F & Zeng, C, 2015, ‘Why do Chinese local governments transfer their rights of control over SOEs to the central government?’. Applied Economics Letters, vol 22., pp. 1252-1256

    Abstract

    This article investigates local authorities’ motives for transferring their rights of control over state-owned enterprises (SOEs) to the central government. Using a difference-in-difference approach, we find that both employment and investment improves significantly following such transfers, and these findings are more pronounced among firms located in regions where the political pressure on local officials is higher. However, we fail to find any significant improvement in profitability. Our findings suggest that local governments tend to alleviate the political pressure they face by giving up their control rights and even sacrifice long-term economic benefits to do so.

    Full details in the University publications repository