|Title:||Modern enterprise system restructuring experimental programme for 100 large & medium size state-owned enterprises|
|Subject:||Government business enterprises -- China|
Reengineering (Management) -- China
Privatization -- China
Organizational effectiveness -- Evaluation
Hong Kong Polytechnic University -- Dissertations
|Department:||Department of Accountancy|
|Pages:||vii, 104 leaves ; 30 cm|
|Abstract:||The establishment of a modern enterprise system has become a key priority of economic reform in China since late 1993. The Chinese Government hoped that the adoption of a modern corporate governance system, based on international experience, would help improve state-owned enterprise (SOE) performance and competitiveness. In general, new economic reform measures are usually introduced in a gradualist and incremental style. The modern enterprise system has taken a similar gradualist procedure, and was first undertaken as an experiment with certain enterprises before expanding to the whole economy. In November 1994, the State Council selected 100 large and medium sized SOEs to undertake the experimental practices of establishing the modern enterprise system, called "the one hundred enterprise pilot programme". This study examines whether the financial and operating performance of the chosen pilot firms actually improves after they have undertaken the restructuring activities implied by the modern enterprise system. International experience suggests that privatization has significant positive effects on the SOE performance. However, the empirical results of this study document that the performance of the corporatized SOEs did not improve as expected. The majority of performance measures for pilot enterpnses actually show little change after the restructuring process: return on sales, sales efficiency, net income efficiency, employment, and real sales all remained relatively stable. Only leverage ratios drop significantly. The results are also quite similar when the data are partitioned into smaller sub-samples, listed versus unlisted firms, and industrial versus non-industrial firms. Despite the argument that listing SOEs is the only feasible way to improve their performance, the results from this study show that the effect of partial listing on the overall performance improvement of an SOE appears to be quite limited. This study also attempts to explain two major reasons for the lack of overall performance improvement for the pilot firms. Firstly, the required effective corporate governance mechanisms were not put in place, and government administration still dominated the management of the corporatized SOEs. Secondly, some matched reforms closely linked to SOE reform, such as the reform of pricing, public finance, and social security reform, lagged behind enterprise reform, and this affected the results of SOE restructuring. These findings suggest that the corporatization of SOEs alone may not be enough to improve their corporate performance. Substantial changes in corporate governance structures and matched government reforms closely linked to SOE reform are needed in order to realize the benefits of enterprise reform.|
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