Ownership, Competition, Corporate Governance and Performance: Evidence from the Chinese Listed Companies in Utilities Sectors

During the past decades, different types of reform have been introduced in a different order in various public utilities in China. The present combinations of privatization, competition and regulation reforms are varied across these monopoly industries and thus provide an opportunity for comparing the performances of the different kinds of the reforms. Based on a cross-sectional data from Chinese listed companies in 7 utility sectors, this study examined the impact of ownership, competition and corporate governance on performance index in terms of companies and industries. The effect of corporate governance is not observed in this sample. Electricity sectors perform better than other utilities industries but within this subsample production gain is negatively related to private ownership. The production abilities of companies in water, airline and telecommunication sectors are significantly inferior to electricity sectors which also have a significantly lower cost than railway and airline industries. For rail and airline industries, the percentages of private shares are significantly negatively related to cost index. For telecommunication and airline industries, production is positively related to private ownership. These results indicate that ownership reform is critical in the case of competition which suggests the necessity of introducing competition before the reform and that the degree of competition after ownership reform also matters.