Research On Chinese Firms’ Ownership Structure And Total Factor Productivity

As an important microcosmic body in the economic activity,the firm’s productivity level will directly affect the quality of economic growth.Given the fact that firms of different ownership structures coexist in China nowadays,different ownership structures can lead to different options for the way how the firm is operated,which in turn cause huge differences in firms’ total factor productivity(TFP)level.Therefore,the study of the relationship between firm’s ownership structure and total factor productivity is of great significance to improve firm’s productivity and achieve the efficient growth of Chinese economy.Based on the principal-agent model,this paper studies the mechanism of the effect of firm’s ownership structure on TFP,and thus to compare the feasibility of different ownership structure reform plans.With the firm level data of Chinese industrial enterprises,this paper applies modified OP method to estimate firm level TFP and empirically tests the conclusions reached by theoretical analysis.The results show that the TFP of state-owned enterprises(SOEs)is significantly lower than that of private firms,and inefficient SOEs are not willing to leave the market.This paper also finds that the reform plan of private capital participating in SOEs shows little effect in improving SOEs’ TFP.This is because private capital shows strong preference of efficiency when it decides whether or not to invest in SOEs,thus the inefficient SOEs could hardly carry out reforms to promote their TFP.The paper then shows that the reform plan of state-owned capital participating in private firms is quite feasible and proves that the private firms maintain high level of TFP after state-ownedcapital’s participation,which means this plan can allocate resources efficiently.According to the above conclusions,this paper suggests that the government establish professional investment institutions to carry out the reform plan of state-owned capital participating in private firms,and take the following measures such as raising unemployment benefits,perfecting economic law system and adjusting reform policies according to the industry characteristics so as to take care of the interests of employees,government as well as the society.