Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-22T17:54:52.341Z Has data issue: false hasContentIssue false
  • English
  • Français

Going (More) Public: Institutional Isomorphism and OwnershipReform among Chinese Firms

Published online by Cambridge University Press:  02 February 2015

Heather A. Haveman  and
Yongxiang Wang
Translated by
汪勇祥
Heather A. Haveman
Affiliation:
University of California-Berkeley, USA
Yongxiang Wang
Affiliation:
University of Southern California, USA
Get access Rights & Permissions [Opens in a new window]

Abstract

Publicly traded Chinese firms recently reformed their ownership structuresby converting non-tradable shares, which constituted two-thirds of sharesoutstanding and were held largely by the state, into shares that could tradeon domestic exchanges. To facilitate this reform, tradable shareholders werecompensated with stock grants from non-tradable shareholders. Our analysisfocuses on the level of compensation, the compensation ratio, the ratio of new tradable shares granted to tradableshares outstanding before the reform. Contrary to the predictions ofasset-pricing models, most firms set the compensation ratio around 0.3. Weexplain this surprising convergence using institutional theory. In doing so,we analyze the power and interests of all relevant actors – not just owners,but also state regulators, executives, and other agents — and draw oninsights from resource-dependence and agency theories. We find strongevidence of coercive and mimetic isomorphism, but no evidence of normativeisomorphism. Because our dependent variable is continuous (a ratio), we areable to show that the mimetic effects we observe cannot be attributed tocoercion or norms. Thus, we not only explain an empirical puzzle, we alsoadvance institutional analysis of isomorphism by clearly distinguishingthree isomorphic forces that have been conflated in much previousresearch.

Keywords

agencycorporate governanceisomorphismreformresource dependence委托代理问题公司治理同位现象改革资源依赖理论
Type
Articles
Information
Management and Organization Review , Volume 9 , Issue 1 , March 2013 , pp. 17 - 51
Copyright
Copyright © International Association for Chinese Management Research 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Barsalou, L. 1985. Ideals, central tendency, and frequency of instantiation as determinants of graded structure in categories. Journal of Experimental Psychology, 11(4): 629–654.Google Scholar
Bcltratti, A., & Bortolotti, B. 2006. The nontradable share reform in the Chinese stock market. Working paper, Bocconi University.Google Scholar
Bolton, P., & Dcwatripont, M. 2005. Contract theory. Cambridge, MA: MTT Press.Google Scholar
Brav, A., & Gompers, P. 2003. The role oflockups in initial public offerings. Review of Financial Studies, 16(1): 1–29.10.1093/rfs/16.1.0001Google Scholar
Cohen, J. 1978. Partiallcd products are interactions; partialled powers are curve components. Psychological Bulletin, 85(4): 858–866.10.1037/0033-2909.85.4.858Google Scholar
CSRC. 2001. Guidance opinion on the establishment of an independent director system in listed companies.Google Scholar
CSRC. 2005a. Directive on problems in trying to solve the split-share structure of listed companies.Google Scholar
CSRC. 2005b. Guidance notes on the split share structure reform of listed companies.Google Scholar
CSRC. 2005c. Press conference of the CSRC on the promulgation of administrative measures on the split share structure reform of listed companies.Google Scholar
Cycrt, R., & March, J. 1963. A behavioral theory of the firm. Cambridge, MA: Blackwell.Google Scholar
Darley, J., & Latané, B. 1968. Bystander intervention in emergencies: Dilfusion of responsibility. Journal of Personality and Social Psychology, 8(4): 377–383.10.1037/h0025589Google Scholar
DiMaggio, P., & Powell, W. 1983. The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2): 147–160.10.2307/2095101Google Scholar
Ding, X. 2000a. The illicit asset stripping of Chinese state firms. China Journal, 43(1): 1–28.10.2307/2667530Google Scholar
Ding, X. 2000b. Systemic irregularity and spontaneous property transformation in the Chinese financial system. China Quarterly, 163: 655–676.10.1017/S0305741000014600Google Scholar
Duncan, R. 1972. Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly, 17(3): 313–327.10.2307/2392145Google Scholar
Edelman, L. 1990. Legal environments and organizational governance: The expansion of due process in the American workplace. American Journal of Sociology, 95(6): 1401–1440.10.1086/229459Google Scholar
Fama, E. 1980. Agency problems and the theory of the firm. Journal of Political Economy, 88(2): 288–307.10.1086/260866Google Scholar
Field, L., & Hanka, G. 2001. The expiration of IPO share lockups. Journal of Finance, 56(2): 471–500.10.1111/0022-1082.00334Google Scholar
Fligstcin, N., & Zhang, J. 2011. A new agenda for research on the trajectory of Chinese capitalism. Management and Organization Review, 7(1): 39–62.10.1111/j.1740-8784.2009.00169.xS1740877600002308Google Scholar
Green, S. 2003. China's stockmarket. London: Profile Books/The Economist.Google Scholar
Hannan, M., & Freeman, J. 1989. Organizational ecology. Cambridge, MA: Harvard University Press.Google Scholar
Haunschild, P. 1994. How much is that company worth? Interorganizational relationships, uncertainty, and acquisition premiums. Administrative Science Quarterly, 39(3): 391–411.10.2307/2393296Google Scholar
Hong, H., Kubik, J., & Stein, J. 2004. Social interaction and stock-market participation. Journal of Finance, 59(1): 137–163.10.1111/j.1540-6261.2004.00629.xGoogle Scholar
Huang, J. 2006. Mutual funds' rent-seeking hand in the bargain. Caijing, June 23.Google Scholar
Inoue, T. 2005. Reform of China's split-share structure takes shape. Nomura Capital Market Review, 8(3): 42–59.Google Scholar
Jaccard, J., Tunisi, R., & Wan, C. 1990. Interaction effects in multiple regression. Newbury Park: Sage.Google Scholar
Jensen, M., & Meckling, W. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure . Journal of Financial Economics, 3(4): 305–360.10.1016/0304-405X(76)90026-XGoogle Scholar
Kahl, M., Liu, J., & Longstaff, F. 2003. Paper millionaires: How valuable is stock to a stockholder who is restricted from selling it? Journal of Financial Economics, 67(3): 385–410.10.1016/S0304-405X(02)00258-1Google Scholar
Kahneman, D., & Tversky, A. 1979. Prospect theory. Econometrica, 47(2): 263–291.10.2307/1914185Google Scholar
Keister, L. 2004. Capital structure in transition: The transformation of financial strategies in China's emerging economy. Organization Science, 15(2): 145–158.10.1287/orsc.1040.0043Google Scholar
Larson, M. 1977. The rise of professionalism. Berkeley: University of California Press.Google Scholar
Li, L., Guo, H., & Sun, J. 2006. Who stabbed Shenzhen Development Bank in the back? Casting couch works in bargaining. Economic Observer, August 13.Google Scholar
Li, S., Xia, J., Long, C., & Tan, J. 2012. Control modes and outcomes of transformed state-owned enterprises in China: An empirical test. Management and Organization Review, 8(2): 283–309.10.1111/j.1740-8784.2011.00232.xS1740877600002898Google Scholar
March, J., & Olsen, J. 1976. Ambiguity and choice in organizations. Bergen: Universitets for-laget.Google Scholar
Meyer, J., & Rowan, B. 1977. Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2): 340–363.10.1086/226550Google Scholar
Meyer, J., Scott, W., & Deal, T. 1983. Institutional and technical sources of organizational structure. In Meyer, J. & Scott, W. (Eds.), Organizational environments: 45–67. Beverly Hills, CA: Sage.Google Scholar
Mizruchi, M., & Fein, L. 1999. The social construction of organizational knowledge. Administrative Science Quarterly, 44(4): 653–683.10.2307/2667051Google Scholar
Murphy, K. 1999. Executive compensation. In Ashenfelter, O. & Card, D. (Eds.), Handbook of labor economics, Vol. 3: 2486–2564. New York: Elsevier Publishing.Google Scholar
Naughton, B. 2007. The Chinese economy: Transitions and growth. Cambridge, MA: MIT Press.Google Scholar
Nisbett, R., & Ross, L. 1980. Human inference. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Oi, J., & Walder, A. (Eds.). 1999. Property rights and economic reform in China. Stanford: Stanford University Press.Google Scholar
Pfeffer, J., & Salancik, G. 1978. The external control of organizations. New York: Harper and Row.Google Scholar
Putterman, L. 1995. The role of ownership and property rights in China's economic transition. China Quarterly, 144: 1047–1064.10.1017/S0305741000004720Google Scholar
Shapiro, S. 2005. Agency theory. Annual Review of Sociology, 31: 263–284.10.1146/annurev.soc.31.041304.122159Google Scholar
Shleifer, A., & Vishny, R. 1986. Large shareholders and corporate control. Journal of Political Economy, 94(3): 461–488.10.1086/261385Google Scholar
Sun, Q., & Tong, W. 2003. China share issue privatization. Journal of Financial Economics, 70(2): 183–222.10.1016/S0304-405X(03)00145-4Google Scholar
Useem, M. 1979. The social organization of the American business elite and participation of corporation directors in the governance of American institutions. American Sociological Review, 44(4): 553–572.10.2307/2094587Google Scholar
Walder, A. 1994. The decline of communist power. Theory and Society, 23(2): 297–323.10.1007/BF00993818Google Scholar
Walder, A. 1995. Local governments as industrial firms. American Journal of Sociology, 101(2): 263–301.10.1086/230725Google Scholar
Walder, A. 2011. From control to ownership: China's managerial revolution. Management and Organization Review, 7(1): 19–38.S1740877600002291Google Scholar
Walter, C., & Howie, F. 2006. Privatizing China: Inside China's stock markets. Singapore: Wiley (Asia).Google Scholar
Wang, J., Guthrie, D., & Xiao, Z. 2012. The rise of SASAC: Asset management, ownership concentration, and firm performance profitability in China's capital markets. Management and Organization Review, 8(2): 253–281.10.1111/j.1740-8784.2011.00236.xGoogle Scholar
Wang, W., & Chen, J. 2006. Bargaining for compensation in the shadow of regulatory giving. Columbia Journal of Asian Law, 20: 298–356.Google Scholar
Wang, X. 2004. State-owned enterprise reform and corporate governance of China. Working paper, Fudan University.Google Scholar
Wang, Y. 2011. Rent-seeking by mutual fund managers: Evidence from equity contract renegotiations. Working paper, University of Southern California, Marshall School of Business.Google Scholar
Wu, W., & Wang, Y. 2005. Investment with restricted stock and the value of information. Applied Mathematics and Computation, 163(2): 811–824.10.1016/j.amc.2004.04.012Google Scholar
Xu, X., & Wang, Y. 1999. Ownership structure and corporate governance in Chinese stock companies. China Economic Review, 10(1): 75–98.10.1016/S1043-951X(99)00006-1Google Scholar
Yusuf, S., Nabeshima, N., & Perkins, D. 2006. Under new ownership: Privatizing China's state-owned enterprises. Palo Alto, CA and Washington, DC: Stanford University Press and the World Bank.Google Scholar
Zhao, D. 1997. Decline of political control in Chinese universities and the rise of the 1989 Chinese student movement. Sociological Perspectives, 40(2): 159–182.10.2307/1389520Google Scholar