Soes Performance Evaluation During Transition Period

Performance evaluation is an important component of corporate governance; effective performance evaluation is very important to judge the actual level of operation, to promote enterprise to improve the management and overall efficiency. In recent years, performance evaluation gets general attention in relevant fields and researchers have got a large number of valuable researches, which provides a wealth of information. However, because China's political, economic and cultural environment is different from well-developed market economies, the general evaluation methods can not be suited to reflect the actual efficiency of state-owned enterprises (SOEs) in China. We should take into account China's current reality so as to research SOEs'performance evaluation properly during the transitional period.Ever since the late 1970s, China has carried out reform and opening-up, one of the important goals is to let market mechanism play the basic role in the allocation of resources. In order to achieve this goal, we break many barriers to entry, allowing various forms of ownership develop together. After years of the deepening of reform and opening-up, non-state-owned economy has entered a number of industries, but because of the traditional system and a variety of other factors, in some other sectors, state-owned property rights remained varying degrees of monopoly. At present, the SOEs are most found in telecommunications, electricity, finance, tobacco monopoly, and other sectors.On the surface, SOEs'profits in recent years have been on the rise. But, has their performance been substantial improvement? Is their operating efficiency is much better than other types of business? This dissertation focuses on the performance evaluation method on the basis of the comprehensive use of statistics, econometrics and so on, and I place the research against the backdrop of economic transition. Through the research, we can not only correctly understand the true performance of SOEs, but more importantly, we can also realize the appropriate scope of application and the shortcomings of the existing methods.This dissert is divided into six chapters:Chapter I is introduction. This chapter expounds the meaning of this research, introduces the idea of study, the framework as well as contributions.Chapter II studies the general evaluation methods, and analyzes the characteristics of a variety of methods and their application environment.Chapter III presents China's actual situation during the transition period. On the one hand, state ownership withdraw from a large number of industries from the large number of while non-state ownership developing rapidly, thus promoting the formation of competitiveness; on the other hand, a large number of SOEs still exist in such as electricity, telecommunications, railways, energy and other important industriesThe abundance of state ownership restricts the market competition. SOEs owned monopoly, and their high profit does not come from their operating efficiency, but relies on their monopoly position. SOEs have very complex objectives, which is usually turned to the pursuing private interests by certain interest groups. This is obviously different to that under good corporate governance of non-state-owned economy. Therefore, the performance evaluation applied in the developed market economies can not be commonly used for SOEs, but must be adapted accordingly.In Chapter IV, I explain the adjustments of performance evaluation during economic transition. Taking into account China's actual situation during the transition period, many methods used in the developed market economies can not comprehensively and objectively reflect the real performance of SOEs. To this end, we need adapt them to some extent. The main task of this chapter is to study China's enterprise performance evaluation during transition in-depth.This article holds that the performance evaluation system of SOE reflects reflect China's economic reform a certain extent. However, on the whole, the current evaluation method neglects dynamic efficiency; and is difficult to separate monopoly profits from the normal operating profit. In order to remedy these deficiencies, and to avoid the interference of monopoly price, the paper suggests that total factor productivity (TFP) and innovation performance could be used to improve the evaluation system. Chapter V is the empirical analysis. This section mainly uses statistical, econometric methods to study China's SOEs'performance in order to illustrate the limitations of traditional financial analysis and the unusuality of measuring SOEs'performance.Through the empirical analysis we can learn that the huge profits of SOEs is only a false appearance, and their actual performance is not satisfactory; the profits of SOEs do not come from the excellent management, but rather from its market power abuse. From this study we can see that the traditional financial analysis method partly invalid. With the market-oriented reform deepening step by step, whether the monopoly can be maintained is questionable. In order to get an accurate grasp of the performance, besides the traditional methods, we should also use other tools such as statistical and econometric techniques. Only in this way will it be possible to avoid the so called "prosperity" hoodwinked.In Chapter VI this dissertation's findings are summarized.The main contribution of this dissertation is:First, I study proper application environment of the existing performance evaluation methods, and pointed out that: during the transition period, many traditional evaluation methods is not very applicable.Second, I sum up the characteristics of China's SOEs during the transition period and I think most of the SOEs are monopolistic, so the profits of these enterprises are mainly obtained by robbing from consumers and downstream firms.Third, special market structures and behavior of SOEs determine that most of the traditional evaluation methods are partially or completely failed. This research shows that in order to objectively and accurately evaluate the performance of SOEs, we can not simply use the traditional methods of financial analysis, but should combine with statistics, econometrics, and so on.