The value of partial state ownership in publicly listed private sector enterprises: evidence from China

This article highlights a certain dimension of political connection, namely partial state ownership in private sector enterprises (PSEs). Using a dataset of publically listed PSEs in China, we empirically investigate the effects of partial state ownership of PSEs upon firm performance. We demonstrate channels through which the benefits of partial state ownership are realised in terms of easier access to resources such as credit and industries to which entry is restricted by formal barriers, which ultimately increases the performance of firms. We also find some evidence that political participation of private sector entrepreneurs, another dimension of political connection, becomes less valuable when partial state ownership of PSEs is present.