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The More the Better? Foreign Ownership and Corporate Performance in China

Greenaway, D.; Guariglia, A.; Yu, Z.

Authors

D. Greenaway

A. Guariglia

Z. Yu



Abstract

We examine the relationship between the degree of foreign ownership and performance of recipient firms, using of panel of 21,582 Chinese firms over the period 2000-2005. We find that joint-ventures perform better than wholly foreign owned and purely domestic firms. Although productivity and profitability initially rise with foreign ownership, they start declining once foreign ownership reaches beyond 64%. This suggests that some domestic ownership is necessary to ensure optimal performance. We rationalize these findings with a model of a joint-venture, where strategic interactions between a foreign and a domestic owner’s inputs may lead to an inverse U-shaped ownership-performance relationship.

Citation

Greenaway, D., Guariglia, A., & Yu, Z. (2014). The More the Better? Foreign Ownership and Corporate Performance in China. European Journal of Finance, 20(7-9), 681-702. https://doi.org/10.1080/1351847x.2012.671785

Journal Article Type Article
Acceptance Date Feb 28, 2012
Online Publication Date Jun 22, 2012
Publication Date 2014
Deposit Date Jan 23, 2012
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 20
Issue 7-9
Pages 681-702
DOI https://doi.org/10.1080/1351847x.2012.671785
Keywords Foreign ownership, Corporate performance, China.
Public URL https://durham-repository.worktribe.com/output/1529653

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