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Special Deals from Special Investors: The Rise of State-Connected Private Owners in China

The authors used administrative registration records with information on the owners of all Chinese firms to document the importance of “connected” investors, defined as state-owned firms or private owners with equity ties with state-owned firms, in the businesses of private owners. The authors document a hierarchy of private owners: the largest private owners have direct investments from state-owned firms, the next largest private owners have equity investments from private owners that them-selves have equity ties with state owners, and the smallest private owners do not have any ties with state owners. The network of connected private owners has expanded over the last two decades. The share of registered capital of connected private owners increased by almost 20 percentage points between 2000 and 2019, driven by two trends. First, state owned firms have increased their investments in joint ventures with private owners. Second, private owners with equity ties to state owners also increasingly invest in joint ventures with other (smaller) private owners. The expansion in the “span” of connected owners from these investments with private owners may have increased aggregate output of the private sector by 4.2% a year between 2000 and 2019.

26
Aug
2021
Thursday

Session Chair: Jun PAN
Professor of Finance, Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University and Senior Fellow, ABFER

10:00 am
Special Deals from Special Investors: The Rise of State-Connected Private Owners in China

Chang-Tai HSIEH, Phyllis and Irwin Winkelried Professor of Economics; PCL Faculty Scholar, Booth School of Business, The University of Chicago and Senior Fellow, ABFER

Co-authors:
Chong-En BAI, Mansfield Freeman Chair Professor, Department of Economics and Dean, School of Economics and Management, Tsinghua University
Zheng (Michael) SONG, Professor at the Department of Economics, Chinese University of Hong Kong and Senior Fellow, ABFER
Xin WANG, Research Associate, Department of Economics, Chinese University of Hong Kong
10:25 am
Discussion
Discussant:
Randall MORCK, Stephen A. Jarislowsky Distinguished Chair in Finance and Distinguished University Professor, University of Alberta, Exco Member and Senior Fellow, ABFER
10:50 am
Q&A
11:10 am


Updated 13 Sep 2021

Speakers

  • Chang-Tai HSIEH

    Chang-Tai HSIEH

     

    Phyllis and Irwin Winkelried Professor of Economics; PCL Faculty Scholar, Booth School of Business, The University of Chicago and Senior Fellow, ABFER

    Chang-Tai Hsieh conducts research on growth and development. His published papers include “The Life-Cycle of Plants in India and Mexico,” in the Quarterly Journal of Economics; "Misallocation and Manufacturing TFP in China and India," in the Quarterly Journal of Economics; "Relative Prices and Relative Prosperity," in the American Economic Review; "Can Free Entrybe Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry," in the Journal of Political Economy; "What Explains the Industrial Revolution in East Asia? Evidence from the Factor Markets," in the American Economic Review; “The Allocation of Talent and US Economic Growth,” in Econometrica; “How Destructive is Innovation?” in Econometrica; and “Special Deals with Chinese Characteristics,” in the NBER Macroeconomics Annual.

    Hsieh has been a visiting scholar at the Federal Reserve Banks of San Francisco, New York, and Minneapolis, as well as the World Bank's Development Economics Group and the Economic Planning Agency in Japan. He is a Research Associate for the National Bureau of Economic Research, a Senior Fellow at the Bureau for Research in Economic Analysis of Development, and a member of the Steering Group of the International Growth Center in London.

    He is the recipient of an Alfred P. Sloan Foundation Research Fellowship, an Elected Member of Academia Sinica, and the recipient of the Sun Ye-Fang award for research on the Chinese economy.

  • Randall MORCK

    Randall MORCK

     

    Stephen A. Jarislowsky Distinguished Chair in Finance, University of Alberta, Exco Member and Senior Fellow, ABFER

    Randall Morck holds the Stephen A. Jarislowsky Distinguished Chair in Finance and a Distinguished University Professorship at the University of Alberta’s Alberta School of Business. He earned an honors B.Sc. summa cum laude in applied mathematics and economics at Yale and a Ph.D. in economics at Harvard. He returns periodically to both almae matres – most recently as William Lyon Mackenzie King Visiting Professor at Harvard in 2005 and as Schoen Visiting Professor of Finance at Yale in 2009.Prof. Morck is a Senior Fellow and Vice President of the Asian Bureau of Financial and Economics Research, Research Associate with the National Bureau of Economic Research, Research Associate with the European Corporate Governance Institute, Senior Research Associate in Harvard Law School’s Labor and Worklife Program, and Inaugural Fellow with the International Corporate Governance Society. Google Scholar records almost 36,000 citations to his over 100 research articles, and the Social Sciences Research Network ranks him the 54th most highly cited of 8,000 economics author worldwide. His articles appear in leading research journals including the American Economic Review, Journal of Finance, Review of Financial Studies, and Journal of Financial Economics, in which two won “citations all-star award”. In recent years he has spoken at Brown, Cambridge, Colombia, Cornell, Dartmouth, Harvard, HEC, LSE, MIT, New York University, Princeton, Stanford, the University of California at Berkeley, Yale, and other leading research universities. He is a frequent speaker at conferences in North America and abroad and has advised a number of governments as well as the IMF and World Bank.

  • Jun PAN

    Jun PAN

     

    Professor of Finance, Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University and Senior Fellow, ABFER

    Jun Pan is currently a Professor of Finance and SAIF Chair Professor at Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. Prior to joining SAIF in 2019, she was the School of Management Distinguished Professor of Finance and Professor of Finance at MIT Sloan School of Management. Jun has a B.S. degree in Physics from Shanghai Jiao Tong University, a Ph.D. in Physics from New York University, and a Ph.D. in Finance from Stanford University.

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Agenda