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

Yu, Zhihong; Greenaway, David; Guariglia, Alessandra

Authors

ZHIHONG YU ZHIHONG.YU@NOTTINGHAM.AC.UK
Associate Professor

David Greenaway david.greenaway@nottingham.ac.uk

Alessandra Guariglia alessandra.guariglia@durham.ac.uk



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.

Journal Article Type Article
Publication Date Jan 1, 2014
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 20
Issue 7-9
APA6 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
DOI https://doi.org/10.1080/1351847X.2012.671785
Keywords foreign ownership; corporate performance, China; F2; G32; L25; O5
Publisher URL http://www.tandfonline.com/doi/abs/10.1080/1351847X.2012.671785
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
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....80/1351847X.2012.671785

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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