The Rapid Expansion Of State-owned Enterprise, Business Performance And Social Responsibility

In order to respond to the impact of international financial crisis, Chinese Government has initiated such policies and measures as a 4,000-billion investment plan and top ten plans for industry promotion since 2008. Due to the stimulation of these macroeconomic policies, China’s economy got stabilized and recovered rapidly. Its great achievements have attracted worldwide attention. Because state-owned enterprises occupy a favorable position in respect of resource and governmental policy, a lot of funds invested by China went into state-owned enterprises, which then developed rapidly. At the same time, such industries as real estate, steel & iron, aviation, coal, and food industries faced an excessive financial strain and some serious problems emerged, e.g. industry overcapacity, monopoly & expansion(weakened competition), which seriously impacted the performance of other enterprises. However, it is generally believed that, because state-owned enterprises assume a great number of social responsibilities, their rapid expansion is good for strengthening comprehensive social benefits. Due to these disputes, a lot of experts and scholars attach their attention on such issues as state-owned enterprises’ rapid expansion, corporate performance, and social responsibility that have emerged since 2008.This paper carries out empirical researches by comparing a great deal of data before and after 2008. It mainly focuses on state-owned enterprises’ corporate performance and social responsibility under rapid expansion. Finally, it analyzes the comprehensive social benefits under rapid expansion based on two indicators, i.e. corporate performance and social responsibility.This paper mainly includes the following three parts:Part One: the effect of state-owned enterprises’ rapid expansion on their corporate performanceIn the context of state-owned enterprises’ rapid expansion since the international financial crisis in 2008, this part makes a study of the effect of state-owned enterprises’ expansion on their corporate performance. Using data of companies listed in Shanghai and Shenzhen Stock Exchange as samples, it carries out empirical demonstration for the relationship between state-owned enterprises’ rapid expansion and their corporate performance. Moreover, it analyzes whether state-owned enterprises’ expansion leads to excessive monopoly returns or their efficiency is decreased due to the shortage of competition and innovation encouragement. Analysis results indicate that, since the economic stimulus packages was carried out in 2008, the trend of the rapid expansion of state-owned enterprises was clearly viewed, which varies in different industry. The results of linear model indicate that the expansion of the sate-owned enterprises is negatively related to its performance. Whereas, the results of non-linear model indicate that the relation is not a simple negative one but a U shape, which indicates that after the expansion reaches a certain level, with the enhancement of the creativity and the synergism of diversity, the performance of it will improve.Part Two: state-owned enterprises’ social responsibility and corporate performance under rapid expansionBased on an analysis of the effect of state-owned enterprises’ expansion on their corporate performance, this part further makes a study of the effect of state-owned enterprises’ expansion in different industries on their corporate performance as well as the effect of monopoly and competition mechanism on enterprise’s operation efficiency.State-owned enterprises’ social responsibility is measured by Degree of Contribution per Share. The super-efficiency DEA model is used to estimate state-owned enterprises’ performance. In combination with the emerging Pair copula technology, this paper analyzes the conditional relevance between state-owned enterprises’ expansion, social responsibility and corporate performance and verifies the relationship between social responsibility and corporate performance under the condition of monopoly & expansion. Top 100 listed companies in China are used as samples in the studies. The results of the analysis indicate that, the non-linear conditional correlation of these three shows that there is a clear positive relation between the social responsibility and its performance of the state-owned enterprises. Meanwhile, there is quite a difference of conditional correlation between responsibility and performance among different industries.Part Three: state-owned enterprises’ comprehensive social benefits under rapid expansionBy building a modified SE-DEA model, this part puts social responsibility indicators into the system for evaluating general corporate indicators. With private enterprises’ comprehensive social benefits used for reference, it analyzes and evaluates state-owned enterprises’ comprehensive social benefits. Empirical demonstration is done based on top 100 state-owned enterprises and top 100 private enterprises’ financial data.Due to monopoly industries’ intrinsic monopoly features, it is hard to compare them with competitive private enterprises. In order to analyze the comprehensive social benefits brought by state-owned enterprises’ rapid expansion, we divide state-owned enterprises into monopoly industries and competitive industries. State-owned enterprises’ comprehensive social benefits are analyzed and evaluated by comparing financial statement data of competitive listed state-owned enterprises with that of private enterprises. The results of the analysis indicate that, within the sampled area, state-owned enterprise has a weaker financial performance than the private ones, even with the massive investment of the capital after the economic stimulus packages in 2008. However, as to the status of the social responsibility, the state-owned enterprises are better than private ones. Taking the social responsibility into consideration, the integrated benefits of the state-owned enterprise are better than the private ones. Deducted the effect of monopoly, the integrated benefits of the state-owned enterprise in competitive industries are superior than the private ones, with taking the social responsibility into consideration.