| The government-led state-owned enterprise reform is an important step in China's 30 years of economic reforming process. Throughout the reforming process, the government intervention always plays an important role. In this paper, we investigate the endogenous choice problem of Chinese state-owned enterprises in their decision on whether to privatize or corporatize. Corporatization differs from privatization in the Chinese context, as in the former case, the state remains as a large shareholder, and in the latter case, the state has little or no ownership. We try to answer the following questions: how the endogenous choice of the Chinese state-owned enterprises' restructuring is being made? Why in some areas there have more private enterprises and others have more corporatized enterprises? What are the differences between private enterprises and corporatized enterprises in economic efficiency and employment efficiency? After these questions above being answered, we continue our research to study the effect of government intervention in firms' operational decision-making. And then we can have a clear understanding of the role of government intervention in the transition economic in the macro-and micro-level.On the macro level, we first extend the BSV model to describe the choice-making problem. Using a cross-section of provincial statistics (2001-2005), we show that the larger the local employment pressure, the less likely we see privatization; the more acute the local fiscal pressure, the more likely we see privatization; the more corrupted is the local government, the less likely we see privatization. Privatization also is found to yield consistently efficiency gains over corporatization measured in terms of both employment and firm profitability. The mainly contributions are: First, this research extends the BSV model to decision-making level. Secondly, this study give the empirical support of the extended BSV model using China's sub-region statistical data, and we also discussed the unique phenomenon in the restructuring process of China's enterprises. Lastly, this paper enriches the Shleifer and Vishny's (1994,1998) "Government Grapping Hand" theory.What's more, the effect of government intervention in firms' operational decision-making is also significant. We continue our research to micro-level. The firm's growth options value is an important part of firm's value .We estimate the present value of growth options (PVGO) for a sample of China listed companies (2005-2006) based on real option theories. We find that a firm's present value of growth options is positively related to the firm's learning actions (based on firm's R&D expense), manager's learning actions (based on managers' management experience and social relationship net) and firm's control actions (based on firm's advertisement expense). Further, we find that the importance of learning actions prior to control actions.Based on the research above, we discussed the effect of government intervention in the firms' R&D expenditure decision-making. Chinese listed companies directly controlled by the government have lower R&D expenses, and the more seriously the government intervention; the more obvious the phenomenon appears to be. The companies have poor R&D expenses under the government intervention due to the deviation between the local government's political and social goals and the companies' long-term development objective, and the poor R&D expenses directly reduce the companies' long-term growth value. This study enhances our understanding about the relationship between the company and government in the economic transition period, and also provides a new research perspective for studying the companies' R&D activities in emerging markets.
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