Can state-owned enterprises enhance enterprise value when they shift focus to core businesses? Empirical evidence on the transfer of ‘three supplies and one industry’ in China

ABSTRACT

This research theoretically analysed how corporate value is enhanced when Chinese state-owned enterprises (SOEs) shift their focus. In our analysis of Chinese SOEs listed in A-shares from 2013 to 2019, we describe their process of returning to their primary business using the ‘three supply and one industry’ (3S1I) handover policy. We conducted a quasi-natural experiment to study whether refocusing on SOEs can improve their value. The research shows that the policy enhances the efficiency of SOEs, thus increasing their value. These results were particularly evident among local SOEs. Moreover, SOE employees’ social responsibility performance may have a negative moderating effect on efficiency, indicating that excessive social responsibility can lead to a loss in efficiency and a reduction in SOE value. We conclude by discussing why SOEs should prioritize improving economic value and then fulfil social responsibilities to enhance social value through social purchasing and other ways. This study contributes to the literature by providing recommendations on improving the value of SOE from the perspective of ‘transferring 3S1I’ and refocusing.

KEYWORDS:

• Enterprise value
• quasi-natural experiment
• shift in focus
• state-owned enterprises
• transfer of ‘three supplies and one industry’

JEL CODES:

• G38
• L32
• M41

Author contributions

Overall, all authors contributed to writing, revising and improving the final manuscript.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from 1. financial data: http://www.gtarsc.com; http://www.cnrds.com; 2. 3S1I data: The data linking to the present study could be obtained by sending email to [email protected].

Additional information

Funding

This research project was funded by the National Natural Science Foundation of China (71573043) as a ‘Soft Science Project of the 2020’ for the Rural Revitalization Expert Advisory Committee under the auspices of the Central Agricultural Office and the Ministry of Agriculture and Rural Affairs (125E0202)