The more the better?: foreign ownership and corporate performance in China

Yu, Zhihong; Greenaway, David; Guariglia, Alessandra

Abstract

We examine the relationship between the degree of foreign ownership and performance of recipient firms, using a 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 it reaches a certain point. This suggests that some domestic ownership is necessary to ensure optimal performance. We referred these findings to a model of a joint-venture, where strategic interactions between a foreign and a domestic owner's inputs may lead to an inverted U-shaped ownership–performance relationship.

Citation

Yu, Z., Greenaway, D., & Guariglia, A. (2014). The more the better?: foreign ownership and corporate performance in China. European Journal of Finance, 20(7-9), 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: Jan 1, 2014
• Deposit Date: Jul 4, 2016
• Publicly Available Date: Jul 4, 2016
• Journal: European Journal of Finance
• Print ISSN: 1351-847X
• Electronic ISSN: 1466-4364
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 20
• Issue: 7-9
• DOI: https://doi.org/10.1080/1351847X.2012.671785
• Keywords: foreign ownership; corporate performance, China; F2; G32; L25; O5
• Public URL: https://nottingham-repository.worktribe.com/output/1000331
• Publisher URL: http://www.tandfonline.com/doi/abs/10.1080/1351847X.2012.671785
• Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 2014, available online: http://www.tandfonline.com/10.1080/1351847X.2012.671785
• Contract Date: Jul 4, 2016