Property Rights Compete With The State-owned Enterprises Restructuring

The competing for ownership can be regareded as the competition anmong the stakeholders who have the different control rights provided by the contracts of the firm. The control rights which can benefit the owner can be treated as a sort of assets that can be traded in a competitive market. The reforms of the SOEs can be regarded as a procedure; along which the government has been adjusting the structure of the controls of the firms. The improvement on the efficiency of the SOEs are affected by the non-transaction and non-transformations of the control rights of the SOEs, so the next step of the reform should introduce the competitive mechanism into the transactions of control rights. On the condition of the efficiency of the transaction of the SOEs control rights, the mechanism can maximiz the revenue of the government. Now more and more attention has been put on the price and the efficiency in the market for ownership during the reform of the SOEs. Without transaction cost, according to the Coase theorem, the ex post allocation of the control rights of the firm separates from the ex ante allocation of the rights, so the most efficient structure of the control will appear as the result of the market competition. But the information asymmetric and the incomplete competition have negative effects on the payment ( price) and efficiency (the level of the social welfare) of the transaction in the market for ownership.In this paper, putting the methods of the distribution of control rights of the firm under the incomplete contracts and of mechanism design theory together, we use the mechanism design theory and auction theory to study the effects of the stakeholders actions on the revenue and the efficiency in the transfer of the control rights of SOEs from the view of competing for ownership.First, in chapter two, it summarizes the existing literature on the subject about the relationships among property rights, competition and the performance of the firm, and points out the deficiency in the literature on the market for ownership and the mechanisms for transactions on controls. Next, it analyzes the concepts of the ownership and of the competing for ownership in chapter three, and the effects of the competition for ownership on the optimal allocation of the ownership. This chapter also discusses the payment and efficiency in the reform of the SOEs and transfers of the ownership, and compares the methods used in the transactions of the ownership of the SOEs.Next, it analyzes the trade mechanism for SOEs' ownership from the view of the mechanism design theory. First, in the chapter four, it uses the non-cooperative game theory to discuss the characteristics of the optimal direct mechanism on the transaction of the ownership, and analysis the effects of risk attitude, asymmetric, and constraints of the liquidity of the participators on the payment and efficiency of the ownership trade mechanism. Then, the paper also discusses the effects of shares structure, market structure, competition from the foreign investors and the collusion and corruption in the following chapters.According to revelation principle and the mechanism design theory, when the bidders are risk neutral, symmetric information, without the constraints of liquidity, and the bid is the increasing function of bidders' valuation, all the mechanisms which can chose the highest bidder as winner are efficiency and revenue equality (Myerson, 1981). When one of these conditions is destroyed, the revenue and efficiency will be affected. Under the condition of asymmetric information, when there is only one owner, the bilateral trade of the ownership can't result an efficiency transaction. When the firm has a dispersed ownership structure and the shares are almost equally held, the transaction in ownership will be efficiency. The structures of the ownership (cross-shareholding, pyramid structure etc.) have effects on revenue and efficiency of transfer of ownership. The asymmetric structure of control and the private benefit of control have negative effects on transaction in ownership, but attracting more bidders in bidding for control and increasing the shares for transaction or reducing the private benefit from control will enhance the efficiency of selling the shares. Before the trade on ownership, it can increse the revenue from the transaction in ownership by restructuring the SOEs and giving toeholds to some strategic shareholders or outside investors. Whereas, the proportion of the shares which owned by the outside investors shouldn't disturb the transaction in ownership. During the transaction in SOEs ownership, the competition among investors will affect the distribution of the rents from trade between investors and government, and the market structure after the transaction will affect the surplus of the consumer and the social welfare. The investors can obtain the rents as the asymmetric information between the investors and government. And attracting more invetors in the transaction will always benefit the government and will reduce the influence of the asymmetric information. But more competition will have negative effect on social surplus. When there are some foreign investors and they also have higher valuation, the government can improve the competition and increase the revenue and enhance the efficiency of the transaction by adopting the discrimination policy, restricting the private benefit from control and increasing the shares for transferring properly. The corruptions and collusions in the transaction will decrease the revenue and efficiency of the transaction in ownership of SOEs, therefore in order to improve the efficiency in transaction and destroy the robust of the collusion rings, the government should attract more investors to participate in the competitions.As analysis in chapter nine, the evolution of the assignment of control in SOEs constitutes the reform of the SOEs. The best choice is that the control should be shared when the assignment of control of the SOEs have the constraints from the political, economy, and society. The share of the control has effect on the assignment of control and on the revenue and efficiency of transaction in ownership.Finally, it summarizes the research and indicates the drawbacks and problems await to study in the next step.In conclusion, during the competing for the ownership, the information and the actions of the different stakeholders will affect the assignment of the control rights of the firm, and the structure of the control will affect the efficiency of the competing for ownership. During the reform of the SOEs, according to the factors such as the initial structure of the ownership, the market structure and the environment, restructuring the firm by designing a right transaction mechanism and control sharing mechanism, it can improve the efficiency of the transaction in ownership and increase the performance of the firms. Accordingly, more attention should be put on how to design a right trade mechanism which can suit for the contents and environment for transaction, of course, the research on these questions must be the procedure which combining the theory and practice of the transaction in ownership perfectly.