Mixed-Ownership Reform and Private Firms’ Corporate Social Responsibility Practices: Evidence From China

Abstract

China’s historical mixed-ownership reform (the Reform) has prioritized enhancing the efficiency and financial performance of its large state-owned enterprises (SOEs) through introduction of partial private-sector equity ownership. However, the presence of a significant gap between China’s private enterprises’ corporate social responsibility (CSR) practices and those of its SOEs suggests potential for Reform-related ownership changes to negatively impact economy-wide CSR performance. We therefore examine the Reform’s impact on private acquirer firms’ CSR practices. We use a proprietary data set of firms listed on the Shanghai and Shenzhen Stock Exchanges, covering the 2011–2015 period. Our findings identify that private firms can enhance their economic and political status through acquiring equity in state-controlled or SOEs and, following this, improve their CSR practices. Our findings have policy implications in the context of the world’s largest emerging market and, more generally, for SOE ownership reform in emerging and transition economies.

Keywords

China corporate social responsibility mixed-ownership reform private firms

Ownership reforms in China over the last three decades have seen significant privatization of smaller state-owned enterprises (SOEs), leading to increased private-sector control or partial ownership of the equity of these mixed-ownership enterprises (Harrison et al., 2019). More recently, the national focus of SOE reform (the Reform) has shifted toward achieving mixed-ownership reform of China’s large SOEs. Under the Reform private firms can change their “economic status” and “political status” by becoming joint owners of current SOEs through equity investment. Improved economic status may reduce ownership-based discrimination (Brandt & Li, 2003), easing these acquiring private firms’ financing constraints and lowering their cost of debt. Acquiring improved political status can also potentially reduce private firms’ market disadvantage (Chu & Song, 2015), allowing acquiring private firms’ access to markets traditionally exclusive to SOEs, preferential access to government resources, and the ability to form legitimate contractual relationships with government. However, willingness and capacity to engage with corporate social responsibility (CSR) issues differ between SOEs and private firms (Godfrey, 2005), with the CSR gap between SOEs and private firms being significant in China’s case (Huang & Yu, 2006). This raises several important questions with respect to the impacts on resourcing and CSR performance of private firms that acquire equity stakes in SOEs under the Reform. Do private acquirer firms experience a reduction in financing costs and other resource constraints? What is the impact on private acquirer firms’ active CSR practices?

In this study, we examine the dynamics of private acquirer firms’ social status (i.e., economic status and political status) and CSR practices. We add to what is, to the best of our knowledge, a scarce literature on changes in private firm CSR practices in the context of property right reforms. The Reform provides us with a useful scenario for such a study. We find that private firms acquiring equity in state-controlled or SOEs improve their economic and political status as well as their CSR practices. Our additional tests also suggest that these new economic and political identities improve external rather than internal CSR practices, and that such changes are not related to higher levels of government interventions (GIs). Our supplementary tests suggest that private firms’ engagement with the Reform provides increases incentives for and the likelihood of issue of CSR reports.

Our study contributes to the literature in the following three ways. First, the consequences of mixed-ownership reform are examined from a CSR perspective. The study extends discussion on the Reform to CSR practices, providing both theoretical and empirical evidence from the world’s largest emerging market. Current studies focus on discussing the rationality, mechanisms for achieving, and the influence of mixed ownership (e.g., Schmidt, 1996), or raise concerns about the economic consequences of private enterprises participating in mixed reform (Zhao et al., 2017). However, there is no literature on the CSR performance of private enterprises that participate in the mixed-ownership reform process. Second, the study fills a gap in the literature on the dynamics of private firms’ CSR performance. The Reform allows private firms to acquire state-owned equity and through this to potentially access resources traditionally available mainly to SOEs. In comparison, firm-level studies have typically discussed the privatization of SOEs and their subsequent financial performance (e.g., see Megginson & Netter, 2001), policy burden (Chen & Tang, 2014; Liao et al., 2009), innovation capabilities (Gelves & Heywood, 2016; W. G. Li & Yu, 2015; Y. W. Wang & Chen, 2017; Zhang et al., 2003), and cost of capital (Holderness, 2009; P. Wang et al., 2015), but have ignored private firms’ CSR performance. Third, the study contributes to an evolving literature on CSR practices in emerging markets. Heterogeneous property rights may imply different CSR performance outcomes (Huang & Yu, 2006). However, the existing literature focuses on static discussions of state versus private ownership. Given China’s dual-track economy, the Reform offers a natural experimental environment under which to examine the dynamic identity of and changes in CSR performance.

The rest of the article is structured as follows: “Literature Review and Hypotheses” reviews the literature and develops our hypotheses. “Data and Method” describes our data and methodology. “Analysis of Results” presents the analysis of our results and robustness tests. “Conclusion” concludes the article and suggests avenues for future research.

Literature Review and Hypotheses

Private Ownership and CSR Performance

Private firms have emerged and significantly contributed to China’s economic success following inception of its “Open-Door” policy (Allen et al., 2005). However, a lack of public trust, lower perceived legitimacy than SOEs, credit discrimination, a lack of political connectedness, and other issues, have placed private firms at a competitive disadvantage in the marketplace (Choiet al., 1999). This is reflected in noticeable and long-standing disparities between private firms and SOEs in terms of political and economic status or, combined, “social status.” Private firms’ low political status aligns with the weak property rights relationship between China’s government and private enterprises compared with that often enjoyed by its SOEs. Given China’s planned economy background, its SOEs embody government ideology and still control most of the country’s resources. SOE executives normally bear official rankings comparable with that of government officials, with heads of SOEs often being under the jurisdiction of party committees at all organizational department levels. As a result, SOEs are more likely to enjoy political ties, allowing access to government subsidies, major national projects, and many other favorable conditions, such as land acquisition, in their competition against private firms (Detomasi, 2008; H. Li & Zhou, 2005). Lacking such political status makes it difficult for private enterprises to compete with SOEs in areas such as government subsidy applications, bidding on major projects, and tax optimization. Private firms’ low economic status aligns with difficulties in accessing financing through bank credit markets (Brandt & Li, 2003), initial public offerings, and bond markets, relative to SOEs. Here SOEs’ excessive capture of financial resources produces a crowding-out effect, resulting in the discriminatory treatment of competing private enterprises in China’s capital markets (Cull et al., 2009). State-controlled banks give preference to SOEs in their lending practices in what remains the world’s largest bank-based market (Park & Sehrt, 2001; Xu & Lin, 2007). Private firms may therefore find themselves to be more financially constrained than their SOE counterparts.

Private firms in China also differ from SOEs, with there being a significant gap in the ability and willingness of the two groups to fulfill their social responsibilities and in their CSR practices (Huang & Yu, 2006). Compared with SOEs, China’s private firms disclose significantly less CSR information. According to the White Paper on the China Corporate Social Responsibility Report 2015, SOEs released about 60% of CSR reports between 2010 and 2015. However, private firms issued less than one third of CSR reports.¹ Also, most CSR disclosures are in response to regulatory pressure, while only a small portion of CSR reports are voluntary (Campbell, 2007; Dong & Xu, 2016).

It is typically assumed that SOEs are obliged to fulfill CSR obligations, this being additional to government (central and local) requirements for SOEs to prioritize employment, price stabilization, and social welfare objectives (Boycko et al., 1996; J. Lin et al., 1998; Xu et al., 2016). For large SOEs the pressure to undertake CSR may be higher, given empirical evidence suggests that investor characteristics (M. Wang et al., 2011), firm size (Burton & Goldsby, 2009; Stanwick & Stanwick, 2013), and pressure from the public (Baron, 2001) affect CSR practices, as well as market responses to CSR practice (Billing & Webb, 2008; Schmitz & Schrader, 2015). In comparison, private firms may have CSR practices imposed by either the government or the public, imposing a cost burden. In addition, an inconclusive literature argues that firms that place a low priority on CSR practices may still use these as propaganda (Jones & Murrell, 2001), a means to circumvent regulations (Maxwell et al., 2000), or to cover-up market failures (Aupperle & Hatfield, 1985; Siegel & Vitaliano, 2007). For example, China’s private firms commonly use donations to avoid tax. In addition, private firms’ capital constraints can prevent their CSR engagement, while disadvantages in market competition against SOEs and in access to various resources (Chu & Song, 2015), may leave insufficient resources for achieving CSR outcomes. Finally, the biases against private firms may reduce their willingness to engage in CSR activities. In short, their inferior business position may lead to reduced incentives to engage in CSR while a lack of resources may also reduce the ability to fund such activities, leading to the traditionally poor CSR performance observed for private firms.

The Reform and Identifying Changes in CSR Practices

The Reform is intended to further institutional change consistent with the development of a socialist market economy (Liu, 2015), and to enhance economy-wide efficiency and firm financial performance (Central Committee of the Communist Party of China [CPC] & State Council, 2015; State Council, 2015, 2017; Yang, 2015). The Reform’s focus on financial performance is supported by concerns regarding a return-on-assets for large SOEs lower than their cost of capital (Lardy, 2014), suggesting a dampening effect on GDP growth, and is further supported by concerns regarding large SOEs’ resistance to reform, corruption, and abuse of monopoly power (Fan, 2014).

Both theoretically and empirically the injection of a controlling private equity stake into China’s large SOEs has the potential to narrow financial performance differences between SOEs and private firms. Private firm business performance is traditionally viewed as more efficient than that of SOEs (e.g., see Megginson & Netter, 2001). Diversification of property rights (i.e., to include greater private ownership and residual claim rights) increases incentive compatibility within a more market-oriented environment that improves firm efficiency and reinforces value creation (Harris et al., 2010; Shleifer, 1998). This includes where it increases monitoring and efficiency of control of management (Shleifer & Vishny, 1986), or allows greater incentives to be offered to the management of the privatized firm (Estrin et al., 2009), improving management performance. Partial privatization of SOEs also potentially increases the transaction costs of direct GI in the firm, again due to the introduction of private ownership and residual claim rights (Sappington & Stiglitz, 1987). These transactions costs will increase with the proportion of non-state equity ownership in the firm.

From the perspective of China’s private firms, the Reform offers a historical opportunity to upgrade their political and economic status and access traditionally exclusive resources. The acquisition of state equity therefore offers a fast-track for private firms.² By taking over state-owned and state-controlled firm equity, private acquirer firms will potentially improve their ability to acquire resources and gain political ties, reducing resource-based impediments to enhancing their CSR performance. The need to comply with state expectations regarding firm CSR performance will, in addition, add incentives for private acquirer firms to improve CSR performance to ensure continued access to these additional resources (Lin et al., 2014; Lopatta et al., 2017). This is in addition to the incentives provided by the potential positive impact on valuation of greater adoption of CSRs (Jo & Harjoto, 2011; Lima Crisóstomo et al., 2011).

From the perspective of economic status, private firms may effectively reduce their financing barriers and alleviate their financial constraints. Acquiring state equity in state-controlled or SOEs may add to a private firm’s reputation, signal a guarantee of support due to the presence of state ownership, and reduce biases in accessing external financial resources. Chinese banks tend to favor SOEs in their lending practices (Demirgüç-Kunt, 1998). Taking over state-owned and state-controlled firm equity may allow private firms to access more bank loans. Private firms normally originate from family businesses and lack efficient governance frameworks. Public governance associated with partial state ownership may effectively assist in remediating private firms’ governance deficiencies. In addition, improved governance mechanisms may improve private firms’ risk-taking capacity and lower borrowing costs. Property rights discussions also suggest that public governance and corporate governance may have reciprocal or substitute effects. Provided with the guarantee associated with partial state ownership, private firms may be better able to forecast for their cash flows and be less exposed to insolvency risks. So, private acquirers of state-owned and state-controlled firm equity may enhance their economic status and gain access to the additional financial resources essential for enhancing CSR practices.

In addition, from a political perspective, private firms may find it easier to access government resources after acquiring state-owned and state-controlled firm equity. Resource dependence theory suggests that government ties are an external resource that plays a key role in distributing government resources. Private firms are typically disadvantaged from accessing government resources as outsiders (Xiong et al., 2018). Therefore, private firms must develop political ties to compete for scarce resources such as joining a sector or accessing tax incentives and government subsidies (Claessens et al., 2008; He et al., 2019; Lin et al., 2014; Xin & Pearce, 1996). Private firms used to develop political ties through bribery, hiring, and joining the National People’s Congress (NPC) or Chinese People’s Political Consultative Conference (CPPCC). As bribery has become highly risky following President Xi’s 2012 anti-corruption campaign, implicit commitments from corrupt officials are less reliable to private firms. Hiring former government officials and SOE executives or joining the NPC or CPPCC may have seemed practical alternatives for private firms. The Reform, in comparison, may offer a less costly means to develop political ties. Through taking over partial ownership of state-owned and state-controlled firms, private firms may become insiders, enjoy SOE ties with the government, and subsequently enhance their legal status. Meanwhile the government holds stable and explicit relationships with the target firms through its ownership share. Thus, the synchronization of private and state ownership allows private firms to have better ties with the government. As the Reform is part of a national strategy, and embodies government targets at all levels, private firms may attain a higher political status than before.

A revolving door of state ownership, ownership ceilings, organizational culture, and other barriers, have traditionally prevented private firms from gaining the synergies available from taking over state-owned and state-controlled firm equity, reducing collaboration between private firms and the government on CSR issues. As perceptions of CSR performance are affected by social expectations, under the Reform private acquiring firms may also need to demonstrate their legitimacy and improved status to overcome these traditional barriers.

Legitimacy theory identifies the need for firms to conform to stakeholders’ expectations, beliefs, and social values (Suchman, 1995; Weber, 1968). Organizations are generally evaluated as acceptable in terms of legitimacy where they conform to common strategies and practices associated with the social system (Deephouse & Carter, 2005). Clear compliance with laws and rules provides firms with the ability to gain regulatory or institutional legitimacy. To acquire normative legitimacy requires that firms’ products, technology, and processes, meet ethical and social benchmarks. Cognitive legitimacy, a culture-based concept, identifies the requirement that social expectations be satisfied by firms (Scott, 1995). As argued by Meyer and Scott (1983), firms that fail to gain the normative and cognitive aspects of organizational legitimacy will face barriers in obtaining consistent access to the resources required for survival and growth of the firm. Disclosure may also assist private acquirer firms to improve legitimacy across each of the regulatory, normative, and cognitive dimensions of legitimacy (Du, 2012), helping private acquirer firms to satisfy stakeholder requirements and gain external support. The above suggest that to ensure continued access to resources made available by the Reform, private asset acquirers will need to both prioritize establishment of CSR credentials as well as continued maintenance of CSR performance consistent with stakeholder, including state (Lopatta et al., 2017) expectations to maintain organizational legitimacy. The incentive to allocate resources to this endeavor, and change to CSR performance, is likely to be greater for those firms with lower levels of economic and political status prior to acquisition of state-owned equity.

Based on the above theoretical discussion, we develop our hypotheses as follows:

Hypothesis 1A (H1A): Private firms that acquire state-owned equity to create mixed-ownership enterprises under the Reform significantly improve their CSR practice.

Hypothesis 1B (H1B): The lower the economic status of the private firm acquiring state-owned equity to create a mixed-ownership enterprise under the Reform, the greater the improvement in the firms’ CSR practice.

Hypothesis 1C (H1B): The lower the political status of the private firm acquiring state-owned equity to create a mixed-ownership enterprise under the Reform, the greater the improvement in the firms’ CSR practice.

Data and Method

Data

We include all acquisitions of and by listed A-share firms on the Shanghai and Shenzhen Stock Exchanges between 2011 and 2015 in our initial sample. We treat the acquisition of the target company as a merger and acquisition event. We first select mergers and acquisitions by private listed companies, this identity being defined by the legal nature of each firm’s ultimate controllers.³ We exclude mergers and acquisitions of financial institutions. This is mainly because of the special nature of financial listed companies, including their business model, competitive situation, financial structure, and other features that differ significantly from nonfinancial enterprises. We then exclude those undertaken as a means of asset divestiture, debt restructure, asset replacement, or share repurchase. We further exclude asset acquisitions such as land and other asset acquisitions and retain only equity acquisitions. Asset replacement and divestiture, debt restructuring, and acquisition of land use rights and other asset acquisitions are not mixed-ownership reforms as defined by the merger and acquisition model. This is because mixed-ownership mergers and acquisitions aim to achieve full integration of state-owned and private capital, and thus achieve the dual advantages of the two within the same operating body. And the deal value is at least RMB¥1 million. Excluding merger and acquisitions with missing data, we have 1,026 valid takeovers in our sample. We derive merger and acquisition information, financial indicators, and firm governance data from the China Stock Market and Accounting Research (CSMAR) database.

Variables

Measurement of CSR performance is a key component of this study, a variable with a lack of standardized measurement. The current literature adopts reputation index (Moskowitz, 1972), key indicator (Brammer & Pavelin, 2006), and third-party rating (Cui et al., 2018) methodologies. Among these, the reputation index methodology utilizes experts and scholars to construct CSR surveys. Experts set weights for various aspects of CSR after evaluation, allowing a CSR score to be determined. However, the method is subjective, it being difficult to obtain objective and accurate evaluation criteria. The key indicators approach utilizes content analysis based on annual reporting of enterprise tax, donations, and other indicators, suggesting an endogeneity problem, and often uses the amount of donations to measure the level of CSR, a single and one-sided dimension. As third-party ratings possess a certain degree of authority and independence, they are used in a growing number of studies. In the case of CSR research on China’s capital markets, the Rankings (RKS) and Hexun indices are the two most widely used sets of CSR ratings Zhong et al. (2019). We adopt the CSR index from HeXun.com (www.hexun.com) as the CSR performance measure in this study.⁴ HeXun.com provides CSR indices of China’s listed firms for five major dimensions: investors; employees; suppliers, customers, and consumers; environment; and social responsibility. These are based on publicly disclosed firm annual reports and CSR disclosures. The structures of these indices are as follows (Table 1):

Table 1.

Hexun Index Indicators by Level.

Level 1 sub-indicators	Level 2 sub-indicators	Level 3 sub-indicators
	Earnings	Return on equityReturn on total assetsProfit margin on main business Rate of return on costEarnings per shareUndistributed profit per share
	Solvency	Quick ratioCurrent ratioCash ratioEquity ratioAsset–liability ratio
Shareholder responsibility	Return to shareholders	Ratio of dividends to equityDividend payout ratioRatio of dividends to distributable profit
	Credit approval	Number of penalties imposed by the exchange on the company and relevant responsible persons
	Innovation	Product development expenditureTechnological innovation conceptNumber of technological innovation projects
	Performance	Per capita income of employeesEmployee training
Employee responsibility	Safety	Safety inspectionSafety training
	Caring for employees	Employee caring consciousnessList of members of caring for employeesConsolation money for employees
	Product quality	Quality management awarenessCertification of quality management system
Supplier, customer, and consumer rights responsibilities	After-sales service	Customer Satisfaction Survey
	Integrity	Fair competition amongst suppliersAnti-bribery training
Environmental responsibility	Environmental management	Environmental protection consciousnessEnvironmental management system certificationInvestment in environmental protectionNumber of pollutant discharge typesNumber of energy-saving measure types
Social responsibility	Contribution value	Ratio of income tax to total profitsPublic donations amount

Source. www.hexun.com (in Chinese) and Zhong and colleagues (2019).

Notes. Aggregate Hexun Index values may range between 0 and 100. This aggregate is comprised of scores on each of the Level 1 sub-indicator categories which are weighted according to industry type—classified as common, consumption, manufacturing, and service. Shareholder responsibility has a weight of 30% for all industry types. Employee responsibility is weighted 15% in common industries, and 10% in consumption industries. Supplier, customer, and consumer rights responsibilities is weighted 15% in common industries, and 20% in consumption industries. Environmental responsibility is weighted 20% in common industries, 30% in manufacturing industries, and 10% in service industries. Social responsibility is weighted 20% in common industries, 10% in manufacturing industries, and 30% in service industries. See Zhong et al. (2019, Table A.3) re the static weights applied to each of the Level 2 and Level 3 indictors.

We utilize ∆CSR, the difference between the acquirer’s CSR score in the year following the acquisition and its CSR score in the year of the acquisition, as the dependent variable. Our choice of ∆CSR over the level of CSR reflects several considerations. For the firm, levels of CSR performance and the decision to invest in the acquisition of SOE equity are jointly managerial decisions. Thus, it may be that high CSR performance increases the likelihood of engaging in merger under the mixed-ownership reform process. Also, as our interest is in whether engaging in mixed-ownership reform increases private firm CSR performance regardless of its initial level, which may display persistence (Mishra, 2017). For robustness purposes we also compare differences between the CSR score in the year of acquisition and the scores in the second and third years following the acquisition to identify if changes display some permanence. Furthermore, we group the HeXun.com CSR dimensions into external stakeholder (environment and social responsibility) and internal stakeholder (employees and suppliers, customers, and consumers) dimensions, to allow separate analysis of CSR responses to each type of stakeholder group.

To identify private firms’ economic status at the time of the acquisition, we adopt financing constraints as the proxy. The extant literature suggests three measurements of firm financing constraints: investment–cash flow sensitivity and cash–cash flow sensitivity; single financial indicators such as the dividend payout ratio or firm size; and indices such as the Kaplan Zingales (KZ) index (Kaplan & Zingales, 1997), Whited Wu index (WW) index (Whited & Wu, 2006), and Hadlock Pierce (SA) index (Hadlock & Pierce, 2010). The WW index is based on the generalized method of moments (GMM) and use of the Euler equation, which impose strict conditions on data and have limited applications. The SA index, however, covers only firm size and age variables and its effectiveness has been questioned. In comparison, the KZ index adopts an ordered logistic model and is suitable in most contexts (Lamont et al., 2001). Considering the research question and scenarios suitable for this study, we adopt the KZ index, which covers cash, cash flow, and other financial indicators, as the measure of financing constraints.

Our KZ index is calculated as follows. First, we calculate the median of the five ratios: net operating cash flow/total assets of the previous period (CF_i,t/A_i,t_–1), cash dividends/total assets of the previous period (DIV_i,t/Ai,t-₁), cash holdings/total assets of the previous period (CASH_i,t/A_i,t_–1), asset–liability ratio (LEV_i,t), and Tobin’s Q (TOBINSQ_i,t). Net operating cash flow (CF) refers to the net cash flow from operations and is reported in the cash flow statement. Cash dividend (DIV) is the product of cash dividend per share before-tax and the number of shares outstanding. Cash holdings (CASH) are the cash or cash-equivalent items on the balance sheet. The Asset–liability ratio (LEV) and Tobin’s Q (TOBINSQ) are derived from CSMAR. Second, we allocate scores of 1 and 0 to the KZ index values. KZ₁ equals 1 if CF_{i, t} /A_i,t_–1 is lower than the median, and 0 otherwise. Similarly, KZ₂ and KZ₃ are equal to 1 if DIV_{i, t}/Ai, t_–1 and CASH_i,t/A_i,t_–1 are, respectively, lower than the median, and 0 otherwise. KZ₄ and KZ₅ are equal to 1 if LEV_{i, t} and TOBINSQ_i,t are, respectively, higher than their medians, and 0 otherwise. Third, we calculate a KZ index of sample firms for each year, equal to KZ₁ + KZ₂ + KZ₃ + KZ₄ + KZ₅. Fourth, we construct a measurement model for the KZ index. As the above KZ index is comprised of discontinuous variables, we use an Ordered Logistic Regression (OLR) to regress CF_{i, t}/A_i,t_–1, DIV_i,t/A_i,t_–1, CASH_i,t/A_i,t_–1, LEV_i,t and TOBINSQ_i,t with the KZ index as the dependent variable, and estimate the regression coefficients of the variables. Fifth, we estimate the degree of firm financing constraints by using the above measurement results. The smaller the value of the KZ index, the lower the degree of firm financial constraints.

The OLR model is developed as follows.

K Z_{i, t} = \frac{β_{1} C F_{i, t}}{A_{i, t - 1}} + \frac{β_{2} D I V_{i, t}}{A_{i, t - 1}} + \frac{β_{3} C A S H_{i, t}}{A_{i, t - 1}} + β_{4} L E V_{i, t} + β_{5} T O B I N S Q_{i, t} + ε

(1)

Table 2 reports the OLR regression results, which suggest that firms with lower net cash flows from operations, lower cash holdings, lower dividend payout levels, and higher debt ratios, have greater financing constraints.

\begin{array}{l} K Z_{i, t} = - \frac{8.266 C F_{i, t}}{A_{i, t - 1}} - \frac{34.678 D I V_{i, t}}{A_{i, t - 1}} - \frac{3.997 C A S H_{i, t}}{A_{i, t - 1}} \\ + 5.994 L E V_{i, t} + 0.510 T O B I N S Q_{i, t} \end{array}

(2)

Table 2.

KZ Index Regression Result.

Variable	$C F_{i t} / A_{i t - 1}$	$D I V_{i t} / A_{i t - 1}$	$C A S H_{i t} / A_{i t - 1}$	$L E V_{i t}$	$T O B I N S Q_{i t}$
KZ	−8.26610***	−34.67814***	−3.99730***	5.99446***	0.51040***
KZ	(–35.135)	(–29.151)	(–33.894)	(52.003)	(40.584)
Observations			LR chi²(5)		Pseudo r²
9,668			9966.39***		.3048

***

, **, and * respectively, indicate significance level at the 1%, 5%, and 10%. LR = likelihood ratio.

We allocate a dummy variable to the acquirer firm to identify it as having high or low financing constraints in the year before the takeover using the value of the KZ index relative to the median value of the KZ index for all firms. If the KZ index is above the median, the value of the dummy variable is 1, which means that the private acquirer’s financing constraint before the takeover is higher, otherwise the dummy variable takes a value of 0.

To identify political status, we adopt government subsidies, which indicate private firms’ access to government resources, as the proxy. We use the logarithm of government direct subsidies to the acquirer in the year before the acquisition relative to the median value for all firms in the sample. When the value is lower than the median, indicating that before the acquisition the acquirer is in receipt of a low level of government subsidy, we allocate 1 to this dummy variable measure, and 0 otherwise.

Furthermore, we adopt a standard list of control variables, including firm size (Size_t_–1), return on assets (Roa_t_–1), asset–liability ratio (LEV_t_–1), operating cash flow (Ocf_t_–1), CEO duality (Duality_t_–1), board size (Board_t_–1), board independence (Gov_t_–1), industry (Ind) and year (Year). To mitigate possible endogeneity issues, we lag these control variables. Table 3 provides the list of variables and their definitions.

Table 3.

Definition and Measurement of Variables.

Variables	Definitions and measurements
$Δ C S R$ (corporate social responsibility)	Social responsibility performance, we adopt data from the independent agency (Hexun.com; see Table 1). We allocate two dimensions (employees and suppliers, customer and consumer rights responsibilities) into “social responsibilities related to internal stakeholders” and allocate the two dimensions (environment and social responsibility) into “social responsibility related to external stakeholders”. ∆CSR = acquirer’s CSR score in the year following the takeover less its CSR score in the year of the takeover.
Trans	Takeover dummy, if the private firm acts in a takeover of state ownership in the year, the value is 1, otherwise 0.
Degree of financing constraints(Dummy_KZ)	We construct a KZ index that measures the degree of financing constraints and calculate the acquirer’s KZ index of the year before the takeover. If the KZ index is above the median, the value is 1, which means that the private acquirer’s financing constraint before the takeover is higher, otherwise 0.
Government subsidy (Dummy_sub)	We use the logarithm of government direct subsidy to the acquiring firm as a proxy. We calculate it 1 year before the takeover, if the value is above the median, we allocate 1 to this dummy, otherwise 0.
Firm size (size)	Firm size is the natural logarithm of firm size as measured by total assets
Return on total assets (Roa)	Return on total assets = net profit/total assets
Asset–liability ratio (Lev)	Asset–liability ratio = total liabilities/total assets
Operating cash flow (Ocf)	Operating cash flow = firm operating cash flow / total assets
Dual	Duality, if the CEO and chairman are the same person, the value is 1, otherwise 0.
Board	Board size as measured by the number of board members
Gov	Percentage of independent directors
Ind	Control for firm industry as classified by CSRC (2012)
Year	Control for year

Method

To examine the dynamics of private firms’ CSR practices over the Reform, we develop the following multiple linear regression model Equation 3.

Δ C S R = α_{1} + α_{2} T r a n s + α_{3} C o n t r o l s + \sum^{} Y e a r + \sum^{} I n d + ε

(3)

where Trans is a dummy variable taking a value of 1 where there is private firm acquisition of equity in listed state-controlled enterprises and SOEs, and 0 otherwise (Table 3). Year and industry fixed effects are used to control for common factors. We also use this model to separately examine the relationships between firm CSR practices and post-acquisition changes in economic and political status.

Analysis of Results

Statistical Description

Table 4 reports the statistical analyses of variables in this study. In Table 4, Trans indicates that only a small portion (10%) of private firms engaged in the Reform and takeover of state-controlled and state-owned firm equity, consistent with the view that the Reform has not received a positive response from private capital and private entrepreneurs (Liu, 2015). Thus, most takeover transactions are among private firms in our sample. Private firms seem reluctant, or highly cautious, regarding participation in acquisitions allowed under the Reform. Another possible reason may be various forms of implicit discrimination against private firms acquiring ownership in state-owned or state-controlled entities through such means as revolving doors and ownership ceilings, which makes takeovers by private firms difficult. ∆CSR has a mean of −0.765, with maximum and minimum values of 42.03 and −45.94, suggesting that private firms generally reduced the level of their CSR practices after mergers and acquisitions. These statistics must be viewed with caution, due to the possible presence of a general increase (decrease) in CSR performance over time, which will be controlled for in the empirical modeling. There is also the potential for higher levels of CSR performance to be observed for the private acquirer due to integration of former SOEs. This reflects that the acquired target enterprise’s original (and higher/lower) CSR performance may affect evaluation of the CSR performance of the private acquirer after the acquisition (i.e., is captured as an average). We utilize additional evidence, in the form of likelihood of announcing release of a CSR report in the following year as a robustness test, to support our conclusions. However, despite these possible biases, there appear to be noticeable differences among private firms. In Table 5, we identify that ∆CSR in the subgroup of firms that engaged in private takeovers of state-owned equity has an average of 1.345, significantly higher at the 5% level than that of −0.658 in the other subgroup.

Table 4.

Descriptive Statistical Results.

Variable	N	M	Max	p25	p50	p75	Min	SD
ΔCSR	1,026	−0.765	42.03	−2.790	−0.195	2.410	−45.94	10.89
Trans	1,026	0.099	1	0	0	0	0	0.299
Size	1,026	21.78	24.59	21.13	21.68	22.30	19.92	0.928
Roa	1,026	0.043	0.163	0.019	0.040	0.066	−0.112	0.042
Lev	1,026	0.389	0.848	0.231	0.372	0.525	0.069	0.191
Ocf	1,026	0.037	0.194	−0.002	0.036	0.075	−0.133	0.063
Dual	1,026	0.341	1	0	0	1	0	0.474
Board	1,026	8.280	15	7	9	9	0	1.568
Gov	1,026	3.059	6	3	3	3	0	0.493

Note. CSR = corporate social responsibility.

Table 5.

Difference in ΔCSR Between Private Acquirer Firms With State-Owned (Trans) and Private (Non-Trans) Equity Acquisitions.

Variable	Trans (1)	Non-Trans (0)	Diff.	t value
Variable	M	M	(1)–(0)	t value
ΔCSR	1.345	−0.658	2.004**	3.103

Note. CSR = corporate social responsibility.

Indicates significance at the 5% level.

Measurement Results

Private firms’ takeover of state-owned equity and CSR practice

We run the ordinary least squares (OLS) regression on the full sample, using industry and year fixed effects to control for time trend and industry sector variations in ∆CSR. Table 6 reports our regression results, both with and without the inclusion of our standard set of control variables. Our results are illustrated in the first and second columns. The coefficients of Trans are 1.491 and 1.356, significantly positive for both OLS models, supporting our H1A. At the same time, private firms’ return-on-assets (Roa) and asset–liability ratio (Lev) are also significantly and positively related to CSR practice after the takeovers. These results conform with our above theoretical discussion, that private firms’ poorer CSR performance may reflect both financing constraints and the availability of resources to support such activities. Financing constraints may be relaxed by taking over state-controlled and state-owned firms’ equity, with subsequent improvement to economic status, facilitating better CSR performance. However, higher levels of leverage may provide incentive for or necessitate a greater focus on CSR performance to attract additional resources. Our H1B is partially supported.

Table 6.

Impact of Private Acquisition of State-Owned Equity on Acquirers’ Corporate Social Responsibility (CSR) Performance.

	(1)	(2)
Variables	ΔCSR	ΔCSR
Trans	1.491**	1.356**
Trans	(2.404)	(2.230)
Size		−0.686**
Size		(–2.324)
Roa		36.078***
Roa		(5.584)
Lev		6.264***
Lev		(4.120)
Ocf		6.740*
Ocf		(1.904)
Dual		−0.644
Dual		(–1.588)
Board		−0.391**
Board		(–2.171)
Gov		1.059*
Gov		(1.881)
Industry FE	Control	Control
Year FE	Control	Control
Cons	7.530***	18.406***
Cons	(3.679)	(2.968)
N	1,026	1,026
Adj_r ²	.026	.089

Note. FE = fixed effects.

, **, ***Indicate significance at the 10%, 5%, and 1% levels, respectively.

Mechanisms supporting improved CSR practices

To examine whether there is an impact of improved economic status on private firms’ CSR practices, we subdivide our samples into groups with higher and lower levels of financing constraints prior to the merger and acquisition. As indicated in Table 7, in the group with higher financing constraints, Trans and ∆CSR are statistically significantly and positively related. In comparison, in the group with lower financing constraints, this relationship is not significant. Private firms commonly face property rights discrimination in the form of financing constraints, and are subsequently constrained in their CSR practices, which differentiates private firms and SOEs. A primary objective for private firms participating in the Reform is to obtain an economic status closer to that of SOEs to alleviate property rights discrimination. Therefore, improved economic status is key to private firms improving their CSR practices. Those firms most strongly discriminated against will have the potential for the greatest gains from acquisition of state-owned equity under the Reform. This suggests a higher level of incentive to engage in social exchange to achieve relief of financing constraints, and so a greater willingness to devote resources to improve CSR performance. Our H1B is supported.

Table 7.

Impact of Private Acquisition of State-Owned Equity on Acquirers’ CSR Performance by Pre-Acquisition Levels of Financing Constraint and Government Subsidy.

	(1) high financing constraint	(2) low financing constraint	(3) low government subsidy	(4) high government subsidy
Variables	ΔCSR	ΔCSR	ΔCSR	ΔCSR
Trans	1.909*	1.254	1.477*	0.936
Trans	(1.956)	(1.440)	(1.684)	(0.926)
Size	−0.910**	−0.636*	0.076	−0.982**
Size	(–2.467)	(–1.827)	(0.195)	(–2.549)
Roa	66.936***	20.837***	30.152***	33.140***
Roa	(7.888)	(2.844)	(4.491)	(4.191)
Lev	5.672***	−0.659	3.000	8.563***
Lev	(2.696)	(–0.338)	(1.413)	(5.008)
Ocf	14.473***	6.878	1.452	12.349***
Ocf	(2.923)	(1.503)	(0.265)	(2.968)
Dual	−0.323	−0.744	−0.743	−0.476
Dual	(–0.490)	(–1.572)	(–1.196)	(–0.901)
Board	−0.805***	−0.145	−0.226	−0.553**
Board	(–2.774)	(–0.686)	(–0.804)	(–2.416)
Gov	1.961**	1.415**	0.879	1.271*
Gov	(2.131)	(2.220)	(1.028)	(1.794)
Industry FE	Control	Control	Control	Control
Year FE	Control	Control	Control	Control
Cons	20.826***	26.042***	4.370	22.874***
Cons	(2.719)	(2.889)	(0.511)	(2.820)
N	489	528	502	522
Adj_r ²	.184	.063	.087	.101

Note. CSR = corporate social responsibility; FE = fixed effects.

, **, ***Indicate significance at the 10%, 5%, and 1% levels, respectively.

Extending our discussion to improvement of political status, we subdivide our sample into groups receiving high and low levels of government subsidies. As indicated in Tables 6 and 7, Trans and ∆CSR are significantly and positively related for the group of private firms receiving lower levels of government subsidies prior to their merger and acquisition activities. However, Trans and ∆CSR are not significantly related in the group already in receipt of high levels of government subsidies. In short, our test results also suggest that acquisition of state-owned equity may lead to improved political status, contributing to improved CSR performance by private acquirer firms. Taking over state-owned equity may establish a stable contractual relationship between private firms and the government, which typically favors SOEs. Such stable contractual relationships could not commonly be established by private firms in the past through rent-seeking or other means. Traditionally it has also been difficult for private firms to acquire state ownership. With improved legitimacy and institutional guarantees available because of the Reform, private firms may have increased motivation to meet state expectations regarding CSR performance. Therefore, our H1C is supported.

Extended Tests

Given the diversity of stakeholder interests and the various dimensions of CSR (Lins et al., 2017), we further define our sample by grouping, according to whether stakeholders have a direct (or internal) contact through financial transactions with the firm its operations and product, using four of the five dimensions covered by Hexun.com of private firms’ CSR. These are related to external (environmental and social) and internal (employee and supplier, customer, and consumer) stakeholders. Consistent with prior research (e.g., Kim et al., 2012), we drop the investor dimension from the internal stakeholder grouping. This reflects the importance of financial indicators included in our regression model, their relationship to shareholder responsibility in the Hexun index, and the weight attached to shareholder responsibility in the index (Zhong et al., 2019). Table 8 reports our OLS test results, where we regress ∆CSR for our identified groups of internal and external stakeholders separately, controlling for both time and industry effects in each of the regressions.

Table 8.

Impact of Private Acquisition of State-Owned Equity on Acquirers’ Internal and External CSR Performance, and Role of Direct Government Intervention.

Variables	(1) external stakeholder CSR	(2) external stakeholder CSR	(3) internal stakeholder CSR	(4) internal stakeholder CSR	(5) government intervention adjustment
Trans	1.323**	1.268**	0.786	0.801	1.875
Trans	(2.313)	(2.248)	(1.252)	(1.299)	(1.247)
GI_trans					0.593
GI_trans					(0.329)
GI					−0.245
GI					(–0.299)
Size		−0.395		−0.170	−1.077*
Size		(–1.414)		(–0.651)	(–1.804)
Roa		5.104		−3.190	42.920***
Roa		(0.825)		(–0.609)	(3.391)
Lev		3.477**		0.561	8.999***
Lev		(2.507)		(0.431)	(3.102)
Ocf		5.861*		3.246	9.117
Ocf		(1.889)		(1.230)	(1.344)
Dual		−0.283		−0.051	−0.662
Dual		(–0.779)		(–0.149)	(–0.900)
Board		−0.300*		0.026	−0.325
Board		(–1.774)		(0.179)	(–0.994)
Gov		0.706		−0.271	0.637
Gov		(1.340)		(–0.553)	(0.621)
Industry FE	Control	Control	Control	Control	Control
Year FE	Control	Control	Control	Control	Control
Cons	5.658***	12.812**	−0.053	4.026	28.407**
Cons	(3.392)	(2.242)	(–0.090)	(0.735)	(2.334)
N	1,026	1,026	1,026	1,026	1,026
Adj_r ²	.025	.034	.016	.012	.042

Note. CSR = corporate social responsibility; GI = government intervention; FE = fixed effects.

, **, ***Indicate significance at the 10%, 5%, and 1% levels, respectively.

With respect to internal stakeholders, the coefficients on Trans identify that acquisition of state-owned equity does not significantly impact this dimension of CSR. However, in the case of the external stakeholder dimension, the coefficients on Trans identify that acquisition of state-owned equity does impact external aspects of CSR performance, with the impact on ∆CSR being positive and statistically significant both with and without inclusion of our set of control variables. Therefore, private firms acquiring state equity under the Reform demonstrate stronger commitment to improving external than to internal CSR performance.

The newly established contractual relationship with the government may be based on reciprocal exchange and require that private acquirer firms better attend to external CSR performance, such as philanthropy and environmental protection, which signal positive collaboration with the government. In addition, acquisition of state equity may reduce information asymmetry between private firms and the public. Given resource constraints, private firms may prefer improved external CSR practices, which quickly build their image and reputation, to internal CSR practices, which can be harder to observe. The improved economic and political status of private firms may impose enough public scrutiny to add incentive to improve external CSR practices.

As the government controls many resources in China, GI could be one possible reason for private firms’ better CSR practices after acquiring state equity. The government, with a grabbing hand, may have forced the private acquirer firms to take on more political liabilities after their acquisition of state equity. Resource endowments, geographical location, policies, and other factors may result in noticeable differences in local government practice (X. Wang et al., 2017). To test whether improved CSR practice is potentially a result of GI, we conduct an additional test with the following model (Equation 4):

\begin{array}{l} Δ C S R = α_{1} + α_{2} T r a n s + α_{3} G I + α_{4} G I \times T r a n s + α_{5} C o n t r o l s \\ + \sum^{} Y e a r + \sum^{} I n d + ε \end{array}

(4)

GI is a dummy variable based on the GI index reported by X. Wang et al. (2017). We allocate firms into two GI groups, based on whether measured GI is higher or lower than the median. When the index is higher than the median, we allocate a value of 1 to GI, otherwise 0. All other variables are the same as described above.

Our test results are also reported in Table 8. GI × Trans is not significantly related to ∆CSR, suggesting that direct GI is not the driving factor for improved CSR practice by private acquirer firms. Private firms participating in the Reform improve their CSR practices in the absence of stronger GI. Interestingly, our finding is contrary to that of Fisman (2001), who argues the greater the level of GI the more positive the impact of political connections on CSR practices. This difference may be a result of China’s unique institutional context, where all levels of government must follow national strategies and are required to use promotion of the Reform as a key performance indicator. Therefore, the different levels of government may have a more open, collaborative, and positive attitude toward private firms participating in the Reform. Besides subsidies, tax incentives, and other incentives, the government may tend to avoid imposing political burdens on private acquirers of state-owned equity positions. Therefore, improved CSR performance among these private acquirer firms may be self-motivated. Such changes may also support the proposed advantages of the Reform.

Robustness

For robustness purposes, we conduct several additional tests. First, we collated the sample companies’ CSR scores for the second and third years after the acquisition, compared these with the scores in the year of the acquisition, and conducted a trend-based comparative analysis. The results identify two features supporting that, on average, participation in mixed-ownership reform enhances the social responsibility performance of private enterprises. For the sample enterprises participating in mixed-ownership acquisitions the performance of their CSR improved post acquisition, and the effect of this improvement continued over time. Specifically, in the first year after the cross-ownership acquisition, the CSR level of 54.9% of the private acquirer enterprises increased relative to the year of acquisition. For the second and third years after the acquisition these results are 55.9% and 57.8%, respectively. Second, tests on the correlation between the second and third years following the acquisition identify that the two are positively related.

We next adopt Propensity Score Matching (PSM) to mitigate endogeneity issues. In this modeling, we use nearest-neighbor matching to regress all control variables with the dummy variable Trans to obtain scores for each observation. We then match private firms participating in the Reform with those not participating (one-to-four matching [K = 4]), to get matched samples. Our PSM test results on matched samples, reported in Table 9, support our primary test findings that private firms significantly improve their CSR practices following acquisition of state equity positions.

Table 9.

Robustness Tests: Propensity Score Matching.

Variables	CSR	CSR
Trans	1.528**(2.130)	1.529**(2.194)
Controls	Not controlled	Controlled
Year	Controlled	Controlled
Industry	Controlled	Controlled
Obs	419	419
Adj_r ²	0.030	0.055

Note. CSR = corporate social responsibility.

indicates significance at 5%.

As discussed in “Literature Review and Hypotheses,” private firms are far less subject to mandate than SOEs. The publication of social responsibility reports is not mandatory in China, and so there is a lack of auditing of CSR disclosure. As the publication of social responsibility reports can be considered as a specific representation of the concept of CSR (W. J. Li, 2012), firm CSR disclosures may provide a qualitative signal of their CSR attitudes and performance. Therefore, we introduce a qualitative measurement on the dynamics of private firms’ CSR practices, the likelihood of disclosing CSR in the year following takeover of state equity (Report). For this purpose, we allocate 1 to Report if the private firm provides CSR disclosures in the following year, and 0 otherwise. Our regression results are reported in Table 10. The coefficients on Trans are positive and statistically significantly for Report, providing further support for our findings of improved CSR performance in association with acquisition of equity under the mixed-ownership reforms.

Table 10.

Probability of Announcing CSR report in the Following Year.

Variables	Report	Report
Trans	0.413***(4.809)	0.417***(4.792)
Controls	Not controlled	Controlled
Year	Controlled	Controlled
Industry	Controlled	Controlled
Obs	336	336
Adj_r ²	.165	.325

Note. ***indicates significance at 1%.

In addition, we further control for macroeconomic and industry regulatory conditions. As financing constraints are related to macroeconomic conditions, we control for the impact of credit growth in the marketplace. We select 2012 and 2014, years with higher credit growth rates, as credit-easing periods. In comparison, 2011, 2013, and 2015, with lower credit growth rates, are identified as credit-tightening periods. We allocate a value 0 to the control variable in credit-easing periods and 1 in credit-tightening periods. In addition, as firms in highly regulated industries may be less motivated to engage in voluntary CSR practices than those in competitive industries and information asymmetry can differ across industries, we add further control variables for regulated and competitive industries before redoing the regression modeling. We define those industries classified as important for national security, natural monopolies, important public goods, and high-tech–related, as regulated industries and the rest as competitive ones. The regulated industries include mining (industry code B in CSRC classifications), petroleum chemicals and plastics (C4), metals and non-metals (C6), electricity gas and water supply (D), transportation and warehousing (F) and information technology (G). Our results from this analysis are reported in Table 11. After adding these further controls for macroeconomic and industry features to our existing standard set of controls, we get findings consistent with those for the primary tests. We therefore have greater confidence that our findings are robust.

Table 11.

Macro-Economy and Industrial Features Controlled.

Variables	CSR	CSR
Trans	2.214* (1.895)	2.140* (1.843)
Controls	Not controlled	Controlled
Year	Controlled	Controlled
Industry	Controlled	Controlled
Obs	1,026	1,026
Adj_r ²	.020	.046

Note. CSR = corporate social responsibility.

indicates significance at 10%.

Conclusion

The Reform represents a strategic initiative in the transformation and integration of China’s heterogeneous enterprise forms to realize its transition to a socialist market system. In addition, it provides an opportunity for private firms to acquire resources needed to improve CSR performance, reducing the CSR performance gap with SOEs. This is a priority given China’s current emphasis on changing from “high-speed economic development” to “high-quality economic development.”

Based on merger and acquisition events of China’s private-sector A-share listed companies from 2010 to 2015, this article empirically examines the impact on private enterprises’ CSR performance following participation in the mixed-ownership reform. We utilize the easing of financing constraints and increased acquisition of government subsidies, respectively, following acquisition of state-owned equity as evidence of changes in their economic and political status. We further explore the impact of cross-ownership merger and acquisition on internal and external dimensions of CSR and analyze the regulatory effect of GI retroactively.

We identify that private enterprises participating in mixed-ownership reform improve their level of CSR performance. Furthermore, improvements in CSR performance are only significant for firms with low economic status (higher than median financing constraints) and low political status (receiving lower than median levels of government subsidies) prior to the acquisition. In addition, private acquirer firms focus on improving performance on external dimensions of CSR rather than internal dimensions and are not affected by variations in the level of regional GI. Finally, engagement in mixed-ownership reform increases private firms’ issuance of CSR reports. We conclude that mixed-ownership reform may provide an effective path for removing or reducing biases against private firms and enhance these firms’ incentives for and commitment to improving CSR.

Our findings have several policy implications. Identification of the negative impact of private firms’ lower economic and political social status, highlights that the government may need to improve market access conditions more generally for private firms, and restrain its visible hand in allocating resources to SOEs. In addition, the Reform demonstrates the potential for appropriate policy design to incentivize improvements in CSR practices by private entrepreneurs.

Our study suggests the need for further extensions to this research. Given the limitations imposed by our data and methodology, more detailed theoretical and empirical explorations of the association between mixed-ownership reform and CSR performance for firms with low economic and political status. This includes detailed analysis of the level of increased access to state-controlled resources and to financing available to private acquirer firms under the Reform and the timeframe for such access. In addition, on the market and state discipline applied to firms that do not maintain commitments to improving CSR performance and disclosures following engagement with mixed-ownership reforms.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study is funded by the National Social Science Fund Major Project (19AGL010), National Social Science Fund Youth Project (18CYJ027), Shandong University Humanities and Social Youth Team Project (IFYT17041).

ORCID iDs

Lei Xu

Ron P. McIver

Notes

Author Biographies

Bin Li is an associate professor at the School of Management, Shandong University. Bin’s research interests are mergers and acquisitions and corporate social responsibility. His research has been published in such journals as Accounting & Finance and Pacific-Basin Finance Journal.

Lei Xu is a senior lecturer within UniSA Business, the Business School at the University of South Australia. His research interests cover financial markets, financial systems, and sustainable development. His research has been published in such journals as Accounting & Finance, Applied Economics, International Review of Finance, Journal of Asia-Pacific Business, Journal of Asian Economics, and Pacific-Basin Finance Journal.

Ron P. McIver is a lecturer within UniSA Business, the Business School at the University of South Australia. His research interests focus on financial regulation and reform, corporate governance, financial integration, and sustainability. His articles have appeared in such journals as Accounting & Finance, Applied Economics, Energy Economics, and Journal of Cleaner Production.

Xin Liu is a PhD candidate at the School of Management, Shandong University. Her research interests are in state-owned enterprise reforms and corporate social responsibility. She has published in the Pacific-Basin Finance Journal.

Ailing Pan is a professor at the School of Management, Shandong University. Her research interests are in mergers and acquisitions. She has published in such journals as Accounting & Finance and Pacific-Basin Finance Journal.

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