Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

By Zhangkai Huang, Lixing Li, Guangrong Ma, Lixin Colin Xu. 2017

236 citations recorded by the source corpus.

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther, the SOE is more likely to be decentralized, and this distance-decentralization link is more pronounced with higher communication costs and greater firm-performance heterogeneity. However, when the Chinese central government oversees SOEs in strategic industries, the distance-decentralization link is muted. We also consider alternative agency-cost-based explanations, and do not find much support.

Subfields: Accounting, Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/980b675a4da59b45b9c92f08ce299adbdd3c6842

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In Accounting

1. Marc van Essen
2. P. Duran
3. Sabrina F. Saleh
4. Canan C. Mutlu
5. Mike W. Peng
6. Zhuo Chen
7. C. Liu
8. Shaojian Chen

In Economics and Econometrics

1. P. Duran
2. Mike W. Peng
3. Zhuo Chen
4. C. Liu
5. Zhiguo He
6. Marc van Essen
7. Julie Juan Li
8. Yadong Luo

In Political Science and International Relations

1. Mike W. Peng
2. Zhuo Chen
3. C. Liu
4. Zhiguo He
5. Marc van Essen

Citations in the corpus

• Low-Carbon City Construction and Corporate Carbon Reduction Performance: Evidence From a Quasi-Natural Experiment in China (2021, background): “SOEs are expected to support government authorization with higher political loyalty and better policy compliance (Huang et al., 2017).”
• The financing of local government in China: Stimulus loan wanes and shadow banking waxes (2020, background): “However, if MCB issuance in later years was driven by channels other than the stimulus loan hangover mechanism, we can alleviate this endogeneity issue by controlling for the simultaneous economic conditions, following Knight (2002) , Huang et al.”
• Corporate Governance in China: A Meta‐Analysis (2018, background): “In the 1980s, the development of corporate governance in China started with the decentralization of SOEs and the empowerment of managers (Groves et al., 1994; Huang et al., 2017).”