Global Journal of Management and Business Research, A: Administration and Management, Volume 22 Issue 8

ownership declined significantly in 2012 compared to 2006, it remained high in strategically important sectors. Table II reports state ownership in SOEs belonging to strategic sectors, such as communications, construction, energy, heavy machinery, publications, public utilities, and transportation. The results in Table II show that the state still retains ownership control in strategic sectors (on average 48.29%), 7 8 Although all shareholders have equal voting rights (one share, one vote), in practice the largest shareholder always gains unbridled control over firms (Chen et al., 2009). Chen et al. argued that on average, all block shareholders who attend general meetings account for 95% of voting shares and the largest shareholder controls 84% of the shares present at these meetings. In other words, a typical Chinese listed firm has one shareholder with enough votes to exercise control and a few non-controlling blockholders who are able to implement effective monitoring activities of the controlling parties’ behavior. In contrast, the state holds a relatively smaller proportion of shares (around 37.16%) in SOEs that belong to other sectors, similar to the largest shareholders’ equity holdings in privately controlled firms. These findings provide support for the view that the recent privatization process in China was largely influenced by the “Grasping the large, letting go the small” policy, which allowed the state to retain control of the strategic sectors of the economy. 7 Using the Chinese Securities Regulatory Commission (CSRC) industry classification, this study reclassifies all listed firms into 19 industries (Web site: http://www.csrc.gov.cn ). 8 48.29% is the overall (pooled) mean value of the largest shareholders’ holdings in the listed SOEs distributed among the important, strategic industries in the sample. The Relationship between Ownership Identity, Ownership Concentration, and Firm Performance: Evidence from China 14 Global Journal of Management and Business Research Volume XXII Issue VIII Version I Year 2022 ( ) A © 2022 Global Journals