Business News • MarketWire • CUHK Business School Research Reveals How Political Forces Shape Cost Behavior in Chinese Firms |
CUHK Business School Research Reveals How Political Forces Shape Cost Behavior in Chinese Firms |
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CUHK Business School Research Reveals How Political Forces Shape Cost Behavior in Chinese Firms
HONG KONG, CHINA--(Marketwired - May 29, 2017) - The following article was first published in the China Business Knowledge (CBK) website by The Chinese University of Hong Kong (CUHK) Business School - https://goo.gl/GjvkNf: Since the economic reform in 1978, China has created an economic legend. In 2014, it surpassed the United States in terms of economy output on the basis of purchasing power and became the world's largest economy. The past decade has seen the government's effort in establishing a market economy through privatization of state-owned enterprises (SOEs). However, after the top-down reform, the Chinese government still holds much power in the economy; in particular, self-interested politicians still impose substantial influences on SOEs' financing, investing, operating, and disclosure decisions. As such, the Chinese market is a transitional economy operating between political power (the 'visible hand') and market force (the 'invisible hand'). Yet, it is not clear how the 'visible hand' affects firms' operating behaviors.
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