• 沒有找到結果。

2

ˆ 1 t WL B L g p C T

b    (25)

4. Analysis and Comparative Statics

From equations (23), (24) and (25), we can get the same results as equations (20) and (21). (Here

represents the manager’scontrol over L, and the equilibrium bribe amount under bargaining). Thus we can see that no matter whether the government official or the manager is corrupt, the optimal number of redundant employees and the subsidies are shown to be the same. This conclusion is presented in proposition 1.

Proposition 1: Even though we release the right of personnel control or profit sharing rate to the manager, with the allowance of bribes, the manager will collude with the official, and the equilibrium amount of L and T are under the cooperative choice of manager and officials.

Regardless of who has control over L, the officials and the managers internalize the full cost of making inefficient decisions. When the official controls L, he effectively pays for higher L in terms of lower bribes, and hence he can raise L up to the cooperation level. When the manager controls L, he pays for higher L in terms of political and financial benefit, such as political promotion or more transfer payments.

Therefore, in both privately and publicly owned systems, if corruption exists, the participants would still negotiate and bargain for the utility maximization. This means when the reform of the state-owned enterprises aims to adjust the allocation of earnings and release personnel authority to the managers, if the control by the official still exists, including the management and evaluation or the amount of subsidies, the managers would choose to collude with the officials. Regardless of whether the initial level of redundant employees is determined by the manager or the officials, collusion would always exist. After the collusion, the two participants would get the same number of redundant employee and subsidies as in the case of cooperation.

Therefore, if the state-owned enterprises still belonged to the government or if government officials still have influence on the enterprises, corruption problems

would always occur between government officials and the managers. Thus the state-owned enterprises could not eliminate their role in social welfare and social protection, and the efficiency of a state-owned enterprise depends on the combined utilities of the government official and the manager.

This result is different from the Shleifer and Vishny (1994), who determined that with full corruption, public ownership is not a problem. The allocation of resources is independent of either allocation of profit rights or the control rights over L. But in this paper, we conclude that the optimal redundant employees and transfer payment are decided by two different conditions. The shares of managers can affect the equilibrium level of redundant employees. Both the manager and non-state shareholding can influence the amount of T. Our model emphasizes that with the allowance of corruption, the optimal L and T are the same as the situation where the manager and the official cooperate with each other. This result has an important implication. After some reforms in state-owned enterprises in China, if government officials still have power in these state firms, and with full bribery, the ownership may influence the optimal level of L and T, but it cannot change the collusion between managers and officials. That is, either adopting the shareholder system or the power releasing policy, the combined utilities of the officials and the manager still affect the objective function of the enterprise, and make the state firms bear unnecessary social burden. The failures of the releasing power policy and contract system demonstrate this position. Until November 1994, the percentage of state firms operating with deficits was 41.4% (according to the government budget revenue), the shortfall was 27.6% of that in 1993.3 This poor performance did not change in 1996, when the net profit of the state firms was 41,750 million RMB; a reduction of 42.5% compared with 1995. The amount of deficiency was 72,670 million RMB; compared with 1995, this amount was an increase of 31.5%.4

The financial status of many state-owned enterprises is becoming worse in the process of reform. Even though a stock system has been adopted, the performance

3 Tun, 1995, p40.

4 Jin, 1998, p.89.

improvement is not significant.

Table 1 illustrates the deficits in two different kinds of industrial state-owned enterprises: independent accounting industrial state-owned enterprises, and national budget dependent enterprises. According to Table 1, the deficit percentages of both kinds of enterprises continued to decrease in the first few years of reform and reached their lowest point of less then 10% in 1985. Afterward, they climbed to reach the peak in 1998, when the record-breaking deficit was 115 billion RMB.

The amount of deficit declined in 1999 and 2000, but the total amount of deficit still reached 70 billion. With the gradual opening of price mechanism since 1980s, the deficit amount had increased by 35 times from 1985 to 1998, which means that the deficits are not caused by price distortion. In addition to state-owned industrial enterprises, as inferred from the total amount of all independent accounting enterprises of 134.1 billion RMB, the deficit of non-industrial state-owned enterprises was 51 billion RMB in 1997.

Referring to Table 1 and Table 2, since 1989 the deficits of most state-owned enterprises have been subsidized by bank loans instead of governmental subsidies.

The amount of subsidies, hence, has been decreasing since 1989, without bringing too much burden on the economy as it appeared. However, the real situation is that the enterprises with deficits were compelled to ask for loans from banks to maintain their business under the tight subsidy policy of Department of Finance.

The deficits of state-owned enterprises shown in Table 1 and Table 2 could be greatly underestimated because most enterprises, rather than paying the interest, have additional interest payable to the new loan. Therefore, further analysis based on liability is necessary.

Table 1 Deficit of State-Owned Industrial Enterprises (1978~2000)

2. The amount of deficit (budget independent) 1978-2000: China Industrial Statistical Year Book (2001), p.24.

n.a.: not available

Table 2 Government Subsidies to Deficit State-owned Corporations Source: China Industrial Statistical Year Book (2001), p.247.

Table 3 shows that the number of state-owned enterprises is decreasing, while their total assets are increasing. New state-owned enterprises are often small ones and the number of medium or large ones is decreasing with their reconstruction.

Since 1983, the subsidies from government for current assets of state-owned enterprises have been decreasing, and the state-owned enterprises have been starting to borrow a great deal from the banks. According to Table 4, operating funds transferred from the government have decreased sharply since 1983. The central government announced that they would no longer provide the enterprises with capital of investment of fixed assets at the end of 1984. In 1988, nearly half of the assets of

state-owned enterprises were liabilities, most of which were loans from banks. The liabilities of state-owned industrial enterprises were two-thirds of their total assets in 1993, and 85% in 1995. In recent years, the liability ratio of state-owned enterprises has been maintained at around 65%. However, as seen from the increasing total assets in Table 3, their trend to increase was clear between 1997 and 2001. The total assets increased from 11.2905 trillion RMB in 1996 to 17.701625 trillion RMB in 2001. Although the growth rate of total assets is similar to that of net assets, except for 2001, the first was often been greater than the latter, meaning that the deficits of enterprises did not improve. In addition, Table 4 also shows the inefficient use of capital in state-owned enterprises.

Table 3 Number and Total Assets of State-owned Enterprises (1996~2001) year Absolute

Value in 1996

Base year

(1996) 1997 1998 1999 2000 2001 Numbers of

State-Owned Enterprises

276,000 100 94.9 86.2 78.6 68.8 65.6

Total Assets of State-Owned

Enterprises

11,029,050 million

RMB

100 113.3 122.2 131.7 152.2 160.5

Net Assets of State-Owned Enteprises

4,268,640 million

RMB

100 108.1 118.0 126.1 144.8 156.2

Source: Chen and Zhan, 2001.

Table 4 The Indicators of Financial Status of State-owned Enterprises

2. Chen and Zhan ,2001.

3. China Industrial Statistical Year Book (2001), p.24.

n.a.: not available

The total liability of state-owned enterprises has been decreasing for the past two years, mainly becauseenterpriseswith largedeficitshavebeen “abandoned”

(bankrupt, liquidated or privatized) or have been merged at the request of governmental officials into enterprises with surpluses. To sum up, enterprises adopting a stock system have high liability ratios; their use of capital is inefficient;

and the growth of profit is limited. In fact, the official data clearly underestimates the liabilities ratios for the following reasons. The first is that the liabilities between enterprises, i.e. triangle debts, are not taken into consideration; the second is

that non-state-owned enterprises’liabilitiesarenotincluded;and thethird isthatthe underestimated depreciation ratio causes the total assets to be overestimated.

The government control and monitoring systems of state firms are still maintained under the shareholder system. The state still holds most of the shares of enterprises, and the officials, as the representatives of the state shares, can easily use their power to ask managers and enterprises to assist in their political or personal activities. As for the manager, in order to obtain financial or political benefit, he chooses to collude with the officials no matter how many shares he owns.

Sometimes, both the manager and the officials harm the other shareholders or the enterprise by sharing benefits with each other. So if the Chinese government wants to improve the performance of the stated-owned enterprises by the shareholder system, the state would loosen the control rights from the officials over state-owned enterprises.

Furthermore, from equations (20) and (21), we can obtain the relation between the rank of the official and the values of T and L ; it is 0

T . Secondly, we can also obtain partial derivatives of

equations (20) and (21), we get 0

From the above analysis, we can obtain the next proposition:

Proposition2: No matter whether it is the manager or the official who controls the level of redundant employees, under the collusion of managers and officials, the number of redundant employees has nothing to do with the rank of the official. But the subsidy standard increases with the rank of the official.

The model setting may cause this result. But for the officials, asking the state firms to carry social burden can solve their problem and give them good performance ratings. This common political benefit would not differ between higher or lower rank officials. The decisions on L and T are decided by the combined utilities of the official and the manager to maximize resources under their cooperative control. As for the level of redundant employees L, analyzing equation (21), we can determine that the official and manager will draw cash out of the public financial sources until

the marginal official cost of the last dollar is equal to one dollar under the case thatα is equal or close to zero. The striving for government resources problem would be moreseriouswhen an official’srank ishighersincethecostofgetting extratransfer is lower, dueto thecostofofficial’ssubsidiesisdecreasing with therank p. Under the same cost, the higher rank government official offers more subsidies, which will be reflected on themanager’schoiceof L. In order to increase the amount of redundant employees, the high-ranking government official must release more “good will”, which means more subsidies under lower cost. The relation between the bribe and the rank of officials, and will be discussed later.

Proposition3: With the increase of the shares held by managers, the optimal choice for would decrease. The struggle for the subsidy would increase with β, and decreasewith α.

This means that no matter who has power over the personnel, when the manager’swelfaredependsmoreon thenetprofitofthestatefirm,hewilldecrease the unneeded labor to increase the profit. But he also tries his best to fight for more subsidies. In the process of bargaining, the manager and the official will be compensated by bribes. Analyzing the practice of shareholder system, the officials are willing to coordinate with the policy because the officials still have power over the stated-owned enterprises. Thestate’sambiguousdeclaration thattheproperty of state firms still belongs to the people in China gives the officials a basis to guide the overall shareholder process. Increasing the shares held by managers seems to release the social burden of the state firm, however, the state still holds the largest shares of the firms, and officials can influence the operational decision of enterprises.

Even though the shares held by state are decreased, through regulations or transfer payments, government officials’ control power still exists in state firms. The increase of the shares of managers will make the managers care more about the net profits,and henceitmay begood fortheenterpriseperformance. Themanager’s behavior can be affected in two different ways. One is that the manager will try to decrease the extra employees, which can be observed when the unneeded labor of some state firms are forced to leave their positions especially after the implementation of the shareholder system which would cause another social problem.

For the officials have the power to influence the operational decisions of state firms,

themanager’sdissolution oftheemployeesisundertheconsideration ofofficialand manager combined utilities. The cost of the officials will be compensated by the bribes from the managers, which is the other tactic that the manager will adopt. So the officials and the managers are still the real controllers of the enterprises.

In the official’s position, when the non-state proportion α increases, the optimal subsidies T would decrease. From the above relation, we can see that with the decrease of the state shares, the government official has less control over the enterprise, and the enterprise would depend less on subsidies from the government, which means that the government bears less responsibility for the enterprise. On the other hand, when the non-state and non-manager shares increase, the non-state shareholdersmusttry to getrid oftheofficials’influenceorbecometherealowner of the firm and lead the operation to pursue profit maximization.

To explain the relation between the bribe, net profit and the shares, from equations (19) and (25) we can obtain:

 



If the net profit is positive (i.e. (π-WL)>0), the manager will increase the amount of bribe according to the extent of his own share holding. This means that the corruption amount between the manager and the government official will increase with the increase of β. The above collusion will not change whether the government official or the manager owns the control right over L. If the official owns the control right over L, under the condition that the net profit is positive, equation (26) is positive. If the control right over L belongs to the manager, under the condition that the net profit is positive and [()2] is positive, equation (27) is positive. This proves that in more profitable stated-owned enterprises, the

corruption relation will increase according to the share of the manager. Therefore, no matter whether it is under the contract system or shareholder system, if the control from the government officials still exists, the corruption will be more and more seriouswith theincreaseofthemanager’sshares.

On the contrary, when the net profit is positive (i.e. (π-WL+T)>0), that indicates that the corruption amount between the manager and the government official will decrease with the increase of non-state and non-manager shares. The above collusion will not change whether it is the government official or the manager who owns the control right over L.

If the enterprise is totally owned by government (α=0), and the official has the control right over employment, then when the net profit is less than zero (i.e. (π -wL)<0 ), we can see that the corruption will decrease with the share holding of the

manager. But when α>0, and ] 0

) (

[ 2

 

WL T , with the increase of

subsidies,thepositiverelation between theamountofmanager’ssharesoftheand the bribe is obvious.

If the manager decides the level of the redundant employees, it means that the managerownsthecontrolrightoverL,and when theenterprise’snetprofitisless than zero (i.e. (π-wL)<0), the amount of corruption will increase with the increase of shares of the manager when α=0. When α>0, and [()2]<0, the bribe amount has a positive relation with the shares of the manager. But with α>0, and [()2]>0, the bribe amount has a negative relation with the shares of the manager.

The above relationships are summarized in proposition 4.

Proposition4: When a state-owned enterprise is more profitable, it is more possible for the manager to collude with the official, and offer higher bribes. But in the state firm with deficits, the manager is less willing to bribe the officials, and the non-state shareholders have active motivation to bribe the officials for rescuing the firms.

Generally, if the profit of the optimal number of the employees, π, which is enough to afford the excess burden caused by the redundant employees (that is when (π-WL)>0), no matter whether the decision on the number of redundant

employees is held by the officials or the managers, then it is more possible for the manager to collude with the officials. On the contrary, if (π-WL)<0, then no matter whether it is the government official or the manager who decides the number of the redundant employees, the relation between the bribe and shares of the manager is not certain, but depends on the net transfer.

As for the more profitable enterprises, the managers would promise to increase the number of the redundant employees, with the increasing of the transfer payment, this benefits not only the enterprises but also the manager. Therefore, if the redundant employees are affordable, the manager will be more willing to collude with the officials, and the more profit in the enterprises, the more serious the consequence. On the other hand, after the implementation of the shareholder system,increasing manager’ssharesmay makethem caremoreabouttheprofits. For that reason, the manager may bargain with the officials to decrease the extra employees, using a bribe as exchange. That is why the manager is more willing to collude with the officials. This collusion can make it easier for the manager to negotiate with the officials to reduce the social burden, and yet obtain the same or greater transfer.

From the equations (19) and (25), we have:

0

We can obtain proposition 5 from the relation of the reserved utility of the

We can obtain proposition 5 from the relation of the reserved utility of the

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