Shareholding structure , depoliticization and firm performance : evidence from China's listed firms

Man Lai WONG, Sonja OPPER, Ruyin HU

    Research output: Journal PublicationsJournal Article (refereed)

    38 Citations (Scopus)


    In this study we use a dataset that provides information on Chinese Communist Party grassroots organizations’ political control over decision‐making in China's listed firms. Specifically, we examine how different types of shareholders affect (1) the party's level of decision‐making power and (2) the implications of party control for firm performance. We obtain two major results. First, we find that the proportion of shares held by domestic individual shareholders is negatively related to the party's level of decision‐making power. Second, we find that the existence of large institutional investors is associated with a reduced negative performance effect of party control. Our results suggest that both the exit and the voice channels may offer mechanisms for depoliticizing China's listed firms and improving their performance. This study both addresses an important corporate governance issue relevant to China's listed firms and offers interesting information in terms of comparative studies of corporate governance and reform strategies in transitional economies.
    Original languageEnglish
    Pages (from-to)29 - 66
    Number of pages37
    JournalEconomics of Transition
    Issue number1
    Publication statusPublished - Mar 2004


    • Political control
    • depoliticization
    • corporate performance
    • China's listed firms
    • transitional economy


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