Open Journal of Social Sciences, 2014, 2, 336-340
Published Online September 2014 in SciRes. http://www.scirp.org/journal/jss
How to cite this paper: Du, X.F., Tian, Y.X., Zhang, G.X. and Zhang, H.L. (2014) The Empirical Analysis of State-Owned En-
terprises Performance and Ownership Structure: Based on the Panel Data of State-Owned Enterprises in Sichuan. Open
Journal of Social Sciences, 2, 336-340. http://dx.doi.org/10.4236/jss.2014.29053
The Empirical Analysis of State-Owned
Enterprises Performance and Ownership
Structure: Based on the Panel Data of
State-Owned Enterprises in Sichuan
Xuefeng Du, Yixiang Tian, Gaoxun Zhang, Honglei Zhang
School of Economics and Management, University of Electronic Scie nce and Techno logy of China, Chengdu,
Email: 6492247 9@qq. com
Received August 2014
In this paper, we used Super-efficient DEA methodology and panel data analy sis methods to analy-
sis of the relationship between the performance of state-owned enterprises of Sichan a nd its
shareholding structure. The results showed that: the re is no significant correlation between the
ownership concentration and corporate performance; there exist s s ignifi cant negative correlation
between the proportion of state-own ed shares and corporate performance; there is no significant
correlation between the proportion of corporate shares and corporate perfor man ce. Th us, tha t
moderate control the proportion of state -ow ned shares will be benefit to t he state-owned enter-
prises of Sichuan.
State-Owned Enterprise Performance, Super-Efficient DEA, Panel Data Mode l,
As the backbone of the national economy, State-owned enterprises play a crucial role for China’s economic and
social development. The state-owned ente rpris e of Sichuan plays an impor tant rol e in the process of dev elop ing
the western region. Analysis of the prob lems of state-owned enterprises of Sichuan and optimize performance
management of state-owned enterprises will be of great significance to local economic development in Sichuan.
In this paper, we used Super-efficient DEA methodology and panel data analysis methods to analysis of the rela-
tionship between the performance of state-owned enterprises of Sichan an d its shareholding structure. The result
will provide a reference to optimize the corporate structur e for government decision-making departments and
The relation between ownership structure and corporate performance has been a hotspot of financial academic
X. F. Du et al.
research. As state-owned shareholding structure reflects the company risk taking and mechanism of profit allo-
cation. There are closely related relationship between ownership structure and corporate value. But so far, there
is no clear consistent result between ownership structure and firm performance in historical documents. Demsetz
and Lehn  studied 511 large U.S. companies, found that there is not relevant between ownership concentra-
tion and firm performance (ROE). However , th e research of McConnel and Servaes  showed that there was a
non-linear relationship between ownership structure and corporate performance. Through analysis of existing
research literature, we found that there were no unified empirical results between ownership structure and firm
performance. The main reason for this result was that the measures of corporate performance were different.
Corporate performance indicators using different study on the same issue ma y g et different results. Therefore, a
more scientific performance measures will be essential conclusions of the study. In this paper we use the DEA
method to measure corporate performance, hoping to get closer to the objective facts of the conclusions.
2. Data Sources and Research Ideas
2.1. Data Sources
This data come from CSMAR database, we had chosen annual financial data of the state-owned enterprise in
Sichuan from 2006 to 2009. In order to maintain a consistent time, we excluded the enterprise that mis s data,
and eventually collected 48 samples.
2.2. Research Ideas
2.2.1 Index Selection
The estimation methods of corporate performance are many. In this paper, the internationally popular business
performance evaluation method-DEA method was used. DEA method is one of many methods of enterprise
performance evaluation that is widely accepted. For fur ther information about the DEA method, see Banker,
Charnes and Cooper , Chames, Cooper and Rhodes , Pekka and Luptacik , An dersen and Petersen 
etc. When using DEA method, you need to set the input and output indicators. In this paper, we select as-
set-liability ratio, total assets and employee benefits payable as input indicators, and select total revenue, gross
profit and net profit, etc., as output indicator.
Ownersh ip concentration is the common indicators of concentration of corporate equity. In this paper, the
Herfindahl index is used to measure the degree of ownership concentration, the j-th enterprise ownership con-
centration is expressed as follows:
where, sij means the share what i-th equity owners in the j-th firm has. The higher Herfindahl index shows that
the more concentrated corporate equity. Hou and Robinson  found that the Herfindahl index which was cal-
culated by the company’s total assets, book value and net sales were highly consistent (correlation coefficient
above 0.9). Therefore, in this paper, we only used the company’s total assets to compute industry concentration
index. In addition to ownership concentration, the proportio n of state enterprises, the proportion of corporate
shares and the proportion of outstanding shares are closely related with corporate performance. This article will
examine the relation between these factors and firm performance. According to the research of Morck and Ma-
connell, the geari n g ratio (DAR), net profit growth (GROW ) and company size (SIZE) impact on corporate per-
formance. In this paper, we used the three indicators as control variables. We used the company’s net profit
growth as the company’s grow th targets, and used the natural logarithm of the total revenue as the scale of indi-
2.2.2. Research Ideas
First, use super-efficient DEA method to calculate the value of enterprise performance;
Second, examine the relationship between ownership concentration and firm performance. Use panel data re-
gression model to estimate and test the relationship between ownership concentration and firm performance.
Specific regression model is:
X. F. Du et al.
where DEAit is enterpr ise performance calculated ba sed on DEA, Hit, GRO W it, SIZE it and DAR it repres ent owner
ship concentration, net profit growth, company size and the Asset-liability ratio.
Finally, we present empirical that was about the relationship between corporate performance and equity con-
stitute. Regression equa tion was the Equation (2), that is
itiititit it it
where Fit represents th e propor tio n of state-owned share s and legal person shares
3. Empirical Analysis
3.1. State-Owned Enterprise Performance
Figure 1 shows the ov erall perfor mance of state-owned enterprises of Sichuan fro m 2006 to 2009. Vertical axis
is the average performance of the state-owned enterprises. Figure 1 shows that: by 2008, the average perfor-
mance of state-owned enterprises was rising. However, due to the global economic crisis of 2008 and the Si-
chuan earthquake, average performance of the state-owned enterprises of Sichuan was severely affec ted, began a
3.2. Corporate Performance and Ownership Concentration
In order to investig ate the relationsh ip between the corporate performance and owners h ip structure, we con-
ducted a regression analysis of company performance and ownership concentration. The results are g iven in Ta-
Table 1 shows the regression results of relationship between corporate performance and ownership concen-
tration and other enterprise characteristic variables. Regression −5 Shows that the coefficient of ownership con-
centration is not significant, the remaining coefficients are significant (0.01 significance level), and the coeffi-
cients signs of explanatory variables in the regression equation of different are consistent. This shows that the
regression model is robust. Table 1 report that the coefficient of ownership concentration is −0.2006 in the re-
gression −5, and is not significant (0.01 significance level). Therefore, we cannot explain that there exists a cer-
tain negative correlation between ownership concentration and firm performance, that is to say that ownership
concentration will not affect the company’s performance.
3.3. Corporate Performance and the Ownership Structure
Several former shareholders of state-owned enterprises of Sichuan are most of the state and legal person shares,
and individual shareholders are only a very small part, therefore, this section only analyzed the relationship be-
tween the firm performance and the proportion of state-owned shares and legal person shares. In order to inves-
tigate the relationship between corporate performance and ownership structure we analysis the relationship
among the enterprise performance, the proportion of state-owned shares (F1), the proportion of corporate shares
(F2), and other industry characteristics variables. Table 2 gives regression results
Table 2 show that there is no evidence to support that there existed correlation between the enterprise legal
person shares and firm performance.
Figure 1. State-owned enterprise performance of Sichuan from 2006 to 2009.
X. F. Du et al.
Table 1. The relationship between company performance and ownership concentration.
Dependent variable Intercept H DAR GROW SIZE Adj-R2
Regression-1 1.0554** −0.2006 0.1703
Regression-2 1.2485** −0.3264** 0.1609
Regression-3 1.0791** 0.0004** 0.1187
Regression-4 −10.3696** 1.3094** 0.3410
Regression-5 −10.6189** −0.1391 −0.5229** 0.0014** 1.3661** 0.3485
−5.3359 −0.1328 −1.1951 3.0960 6.4525
Note: 1) “*” indicates significant at the 0.05 level, “**” indicates significance at the 0.01 level; 2) T-value of the parameter estimates in paren theses ; 3)
Select mixed models to estimate parameters.
Table 2. Corporate performance and ownership structure.
Intercept F1 F2 DAR GROW SIZE Adj-R2
Regression-1 −10.2123** −0.0068** −0.3387 0.0017** 1.3126** 0.3394
−4.0797 −4.3452 −0.5311 7.2392 4.5248
Regression-2 −10.6669** 0.0023 −0.4745 0.0014** 1.3584** 0.3573
−4.4136 0.3125 −0.7458 6.5862 4.9037
Regression-3 −10.3898** −0.0057** 0.0021 −0.3725 0.0018** 1.3255** 0.3642
−3.5770 2.5453 −0.5118 0.7841 3.9981 6.4525
Note: 1) “*” indicates significant at the 0.05 level, “**” indicates significance at the 0.01 level; 2) T-value of the parameter estimates in parentheses; 3)
F1 and F2 respectively represent the proportion of state-owned shares and legal person shares.
4. Conclusions and Recommendations
In this paper, we conducted an empirical analysis to the relationship between the performance of state-owned
enterprises of Sichuan and shareholding structure. The main conclusions are following:
First, there is no significant correlation between the ownership concentration and the performance of state-
owned enterprise of Sichuan; there exists significant negative correlation between the proportion of state-owned
shares and corporate performance; there is no significant correlation between the the proportion of corporate
shares and corporate performance. Thus, that moderate control the proportion of state-owned shares will be ben-
efit to the state-owned enterprises of Sichuan. Management departments of the company should further optimize
the ownership structure.
Secondly, using the super-efficient DEA method to portray corporate performance and study the relationship
between enterprise performance and ownership structure, we obtained the similar conclusions to Song and Zhu,
but inconsistencies to Li. This sho wed th at in the research of enterpr ise performance, how to determine the per-
formance indicators was essential. To ensure the objectivity of research findings, researchers should use th e me-
trics indicators that can better reflect the objective s ituatio n of corporate performance.
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