Political Achievement Demands, Government Controland Marginal Social Expenditure:
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| Title | Political Achievement Demands, Government Controland Marginal Social Expenditure:
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| Author | Lu Dong, Sun Yan, Yang Dang and Yang Jijun |
| Organization | Southwestern University of Finance and Economics |
| Email | ludong@swufe.edu.cn |
| Key Words | State-owned Enterprise; Political Achievement Demands; Government Control; Marginal Social Expenditure |
| Abstract | Using the data of Chinese local listed SOEs from 2004-2009, this paper investigates how local government political achievement demands affect its control on SOEs, which results in the marginal social expenditure. This research reveals a transmission mechanism named “political achievement demands - government control - the marginal social spending", which shows the way of how local government intervenes economic consequences of SOEs. We find that: ⑴When the local government is lack of revenue and under the pressure of employment and economic growth, it tends to take more control of SOEs. Especially, when faced pressure of employment, local government would tend to strengthen the control of large-scale enterprise; ⑵As the local government take more control of SOEs, local SOEs will produce more marginal social expenditure, such as the inefficiency of investment and the redundancies; ⑶Government control weakens sensitivity of compensation – performance for top management and distorts incentives of compensation in SOEs to some extent. |
| Serial Number | WP92 |
| Time | 2011-10-27 |
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