Did state-owned enterprises do better during COVID-19? Evidence from a survey of company executives in China

https://doi.org/10.1016/j.jeconbus.2021.105991Get rights and content

Highlights

  • This study uses data from a survey of 1,182 company executives in China conducted in April 2–9, 2020. With business operations in China severely impacted in the first quarter of 2020 by the sudden COVID-19 outbreak, the survey data provides valuable first-hand information on how companies in China responded to the COVID-19 shock. As the shock was sudden and massive, the survey contains information that would be rarely available in normal times, which provides a unique opportunity for carrying out the proposed research.

  • In the survey, state-owned enterprises (SOEs) had significantly better business performance during the pandemic period. We investigate if SOEs’ superior performance was resulted from government support rather than innate ability of coping with the pandemic. Using data on firm's human resources (HR) action taken during the outbreak, we construct a proxy for firm-level government support. We use this proxy in a two-stage estimation approach to estimate firm performance difference associated with ownership-based behavioral difference.

  • The main finding of this study is that, after controlling for the proxy for firm-level government support as well as other observed firm characteristics, the SOEs in our sample are found to have significantly worse performance than NSOEs in the pandemic period. This result is found robust when the estimation is applied to the subsample of non-financial firms and when alternative firm performance measures are used.

Abstract

In a survey of 1,182 company executives in China, state-owned enterprises (SOEs) reported less business reductions under COVID-19. This paper examines if SOEs’ superior performance was resulted from government support rather than innate ability of coping with the pandemic. We construct a proxy for firm-level government support using firm's human resources (HR) action taken during the outbreak with firm's 2019 China revenue share as an instrument for the HR action variable. After controlling for the proxy for firm-level government support as well as other observed firm characteristics, we find SOEs in the sample performing significantly worse in the pandemic period.

JEL classification

D22
H12
P31

Keywords

COVID-19
State-owned enterprises
Firm characteristics
Survey data
China

Cited by (0)

The authors would like to thank an anonymous referee for valuable guidance on the revision of the paper, Jiahua Che, Viktar Fedaseyeu, Jinyu He, Fang Yu and Shuang Zhang for useful comments and suggestions on an earlier version of the paper, Danni Chen for research assistance, and financial support from CEIBS Faculty Research Grant (Code: 17BICS). The authors are responsible for all remaining errors.

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