Corporate Governance Reform and State Ownership: Evidence from China

Using a sample of propensity-score matched overseas and domestically listed firms, we examine whether the effect of corporate governance reform (CGR) in 2001 in China varies among firms with different ownership structures. The positive effect of the CGR is weaker for firms with more state-owned shares, and product market competition increases the effect of the CGR on such firms. These findings suggest that government regulations on corporate governance and market competition can serve as complementary solutions to agency problems that arise from state ownership.