A Study On The Turnover Of State - Owned Capital Returns

As the economic reform carried on, the problem of the SOE profit distribution in China has becoming a hot topic over the years. Before the practicing of budget rule of the state-owned capital operation, the discussions of the relevant issues have been continued for quite a while in both domestic and foreign academic field. In2007, the Chinese government carried out a new enactment called the ’budget rules of the state-owned capital operation’. After that the Chinese academic had a stronger argue on the SOEs’ profit distribution issues. Scholars generally agree that the current distribution policy is quite simplified and is lack of appropriate theoretical basis. Meanwhile, majority of the existing research on the profit distribution policy of central enterprise is usually based on the qualitative analysis method. Some scholars also tried to build a theoretical framework from the angle of innovation, and then they tried to make an empirical analysis on the optimal turn over proportion of SOEs. However, because of the shortage of database and the lack of the relevant theories, they did not carry on the research.So, this paper attempts to start with the particularity of the central state-owned enterprises in China’s social and economic, and make the central enterprise groups of SOEs as the study objects. We try to connect the corporate objectives and the corporate governance requirements of SOEs with the dividend policy theories of modern financial theory. So that we could build a theoretical analysis framework based on the particularity of central SOEs in China. Then we could get a preliminary theoretical model, according to which we could use an empirical research to figure out an optimal turn over proportion of central SOEs profit.This paper divides the central SOEs into three categories based on the regulation standards of the national State-owned Assets Supervision and Administration Commission (SASAC). The central enterprise in the general competitive industry is a focus of this paper. According to the theories of dividends agent cost of Rozeff (1982), we figure out an optimal solution of central SOEs’ profit turn over proportion under the condition of minimum corporate total cost. And then we got an empirical estimate on this optimal solution with database of62central SOEs in the general competitive industry supervised by the SASAC.As for the other types of central state-owned enterprises, this paper makes an analysis frame work under the cost of capital theory. As for the central SOEs in the monopoly industry, we insist a basic premise that the profits acquired by the virtue and resources of monopoly, which are considered as excess profits, should be turn over to the government. The specific turn-over proportion should be comprehensive considered with social cost of capital, corporate objectives and corporate governments. For the type of natural resource monopoly central enterprises, excess profits more than the social average cost of capital should be turned over. For technological monopoly enterprises, due to the special nature of its business goals, government need to leave sufficient retained profits for its technology and other related development. Thus excess profits are the part higher than the GDP growth rate, which need to be turned over. For the oligopolistic central enterprises, a continued development consist with of faster than the industry development is particularly important. So the excess profit of this kind of enterprise is the portion which is higher than the industry growth rate.