The Research Of The Reasons And Consequences Of The Nationalization Of Private Listed Companies

Since the convening of the 14th National Congress of the Communist Party of China in 1992,the reform of Chinese market economy system has been in full swing and "privatization" has become the primary trend.However,there are also some cases of nationalization of private enterprises in this context.In the wake of the financial crisis,the surge of the nationalization of private enterprises has aroused great concern among scholars,and in-depth research has been carried out on the process of nationalization of private enterprises.At present,there are three main viewpoints on the research about the motives of nationalization of private enterprises.First,"resource control theory" of governments,the governments will actively promote the nationalization process of private enterprises out of the need of resource control.Second,"development demand theory" of enterprises,in order to obtain more preferential policies,or to avoid adverse development environment,private enterprises will actively seek nationalization.Third,"situation theory",when countries encounter the financial crisis or other special circumstances,nationalization is an effective means of coping.Combined with Chinese conditions and related theories,we investigate the roles of local governments and private enterprises in the process of nationalization of private enterprises from the "resource control motivation" of local governments and"development demand motivation" of private enterprises in the process of the industrial policy implemented by the central government.Based on these,we use the data of Chinese private listed companies from 2004 to 2016 in this paper.We analyze the characteristics of listed companies which have been nationalized and not respectively.We also analyze the nationalized samples about their years,regions,industries and control level distribution.In addition,this paper constructs a binary choice model for panel data to examine whether the industrial policy affects the nationalization of private listed companies.For the influences of enterprises heterogeneity,we examine whether the industrial policy affects the nationalization of private listed companies which are heterogeneous by constructing a binary choice model for panel data including industrial policy and companies' characteristic.Besides,we examine the nationalization of the private enterprises after the financial crisis.Finally,this paper constructs pooled regression to examine the economic consequences of nationalization of private listed companies.From the statistical analysis,we have the following findings.First,there is no significant difference between the nationalized private listed companies and the non-nationalized private listed companies when we examine whether the sample companies are supported by industries policy.Also,nationalized listed companies have some common characteristics.These listed companies have been listed significantly earlier,with significantly higher leverage,significantly smaller size and significantly fewer employees.In addition,when the private listed companies are located in the areas with higher unemployment rates,the private listed companies are more likely to be nationalized.Second,from the perspective of year distribution,there are nine private listed companies that have been nationalized in 2008,which is the most during the period of the sample.From the perspective of regional distribution,there are seven private listed companies that have been nationalized in Shanghai,which is the most in all regions.And Zhejiang has six private listed companies which have been nationalized.From the perspective of industrial distribution,there are thirty manufacturing private listed companies that have been nationalized,which is the most in all industries.From the perspective of control level distribution,there are 56.5%of the nationalized samples which have been controlled by provincial governments.The empirical results show the following findings.When the company is exposed to the industry which is supported by industrial policy,the probability of the nationalization of private listed companies does not rise significantly.This can be explained by the fact that the central government will allocate more resources or reduce the cost of using resources for key industries to achieve industrial policy goals.This leads the local governments to promote nationalization of private enterprises under the "resource control motivation".By controlling the enterprises to obtain resources which are tilted by industrial policy,the local governments can drive the development of local economy and finish their own political promotion.However,due to the unbalanced regional development in China,the forward-looking industrial policy formulated by the central government is not always compatible with the local economic development.As a result,though the company is exposed to the industry which is supported by industrial policy implemented by the central government,the local governments have not significantly promoted the nationalization of private enterprises.On the other hand,under the background of ownership discrimination,private enterprises will seek identity transformation under the"development demand motivation" to enjoy industrial policy benefits more equally.But nationalization also means giving up control of private profits and after nationalization,the enterprises may face more policy burdens,which results in non-significant change of the nationalization of private enterprises.Further,we find when the company is exposed to the industry which is supported by industrial policy and the companies have heavier tax burden or lager financing constraints,the probability of the nationalization of private listed companies rises significantly.And when the company is exposed to the industry which is supported by industry policy,the companies' performance does not influence the probability of the nationalization of private listed companies significantly.As a result,nationalization is a kind of process which is dominated by private enterprises.And this can explain that in order to avoid the risk of poor development,local governments are more willing to promote the nationalization of private enterprises which have good development status.At the same time,the private enterprises which have developed poorly are more likely to seek nationalization positively.In addition,after the financial crisis,the industrial policy implemented by the central government does not promote the nationalization of private enterprises generally,while when the company is exposed to the industry which is supported by industrial policy and the companies have worse performance or lager financing constraints,the probability of the nationalization of private listed companies rises significantly.This further proves that the nationalization of private enterprises in China is dominated by private enterprises.Finally,the examination of the economic consequences of nationalization of private enterprises shows that the enterprises which have been nationalized have lower tax burden,more long-term loan,less short-term loan,less total loan and unchangeable redundant employees.So we find that Chinese private listed companies have received more preferential policies after nationalization.In the context of the escalating debate about the "guo jin min tui",it is crucial to grasp the motive behind this phenomenon.In this paper,we investigate the role of local governments and private enterprises in the process of nationalization of private enterprises,from the "resource control motivation" of local governments and"development demand motivation" of private enterprises,which helps us to grasp the process comprehensively.In addition,based on Chinese conditions,this paper focuses on the role of local governments in this process which deepens our understanding of local governments' promotion of economic development.Finally,taking industrial policy as the entry point helps us to further understand the implementation effect of industrial policy.