Ownership Structure, Social Burdens And Corporate Performance

Government intervention in business administration is the norm in China's economic operation. One of the consequences of government intervention is to enable enterprises, especially SOEs to bear social burdens heavily. Many Literatures show that government intervention has important impact on the effectiveness of corporate governance. But what types of businesses is vulnerable to the impact of government intervention? Whether the SOEs controlled by different levels of government bear the same social burdens. Generally believed that the social burden have a negative impact on business performance, but why? Research is still relatively little or no consensus.In this paper, the author chooses the sample of A-share listed companies in gear(excluding financial institutions) and proved that the social burden beared by SOEs are more than the social burden on private companies, using panel data regression. Also government intervention are more serious if the companies are controlled by the more low-level government. This paper also describes the social burden reduce the efficiency ofperformance in corporate governance reasons form the unique aspect of executive turnover-investment efficiency sensitivity. The author found that social burdens significantly reduces executive turnover-investment efficiency sensitivity, enlarge the manager's moral hazard, and reduce the efficiency of governance. This conclusion can partially explain why seemingly sound governance mechanisms do not work in china.