Speaker：Li Shengyu

Time: 10:00-11:30am,Wednesday, December 18, 2019

Site：EMS A208

Abstract: This paper investigates how external monitoring from government influences the performance of state-owned enterprises (SOEs), by affecting managerial expropriation in procurement (proxied by input prices) and shirking in production management (proxied by productivity). Because firm-level input prices are usually not observed, we apply a structural approach of production function estimation to estimate them together with firm-level productivity, providing a methodologically practical approach to overcome the common data limitation. Using a nationwide policy shock in China that strengthened government monitoring on SOEs exclusively, we find enhancing monitoring can substantially improve SOEs' input prices and productivity. Moreover, as spatial-dimension evidence, higher monitoring costs increase input prices paid by SOEs and reduce productivity. Such negative effect is largely alleviated by the monitoring-strengthening policy. The results suggest that government monitoring can be an effective policy instrument to improve SOE performance.

Introduction to the Speaker：