Effects of Pilot Programs for China’s Central SOE Board of Directors

摘要

Since June 2004,the State-Owned Assets Supervision&Administration Commission(SASAC)has launched pilot programs for a board of directors(BoD)for central SOEs to establish and improve their governance structure and standardize their exercise of shareholder rights over state-owned listed companies.Based on this quasinatural experiment,this paper examines the BoD’s effects on the agency cost of state-owned listed companies and their economic consequences.Using data of central SOE-controlled companies listed at Shanghai and Shenzhen stock exchanges during 2002-2015,this paper finds that the pilot programs significantly reduced the two types of agency costs for the companies,and such effects primarily existed for listed companies with smaller central SOE shareholding ratios.Further test uncovers that,compared with central SOEs that did not carry out the pilot programs,those that did reported higher economic value-added and stock returns.Our conclusions offer a new interpretation of the BoD’s governance effects from a controlling shareholder’s perspective,and provide empirical evidence for the positive effects of the pilot programs for central SOE boards of directors.These findings have important policy implications for deepening SOE governance reforms.