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A common theme in the analysis of the contemporary Chinese economy is that the Chinese state owned enterprises fail to operate efficiently because of ambiguous property rights, soft budget constraints, and government intervention. These authors advocate an economic reform program based on large-scale privatization. This dissertation advances an alternative perspective on the state owned enterprises. In the first essay, I argue that the state owned enterprises have made an important contribution to China's macroeconomic stability. This view draws from Hyman Minsky's argument that a large government sector is indispensable for a capitalist market economy to maintain macroeconomic stability and avoid deep recessions. I argue that in the Chinese context, the state owned enterprise sector must be sufficiently large so that public sector investment accounts for about 50 percent of the total capital formation. In the second essay, I argue that the performance of the state owned enterprises can be enhanced by promoting workers' participation in management. I conducted a survey of workers' participation in management in large and medium-sized industrial enterprises in China's Henan province. Using the data collected from this survey, I performed econometric analyses to explore the relationship between workers' participation and firm performance, finding evidence that participation does improve performance. The third essay addresses what is now termed “disguised unemployment” in the state owned enterprises. The existing literature argues that the state owned enterprises fail to use their labor force efficiently. In this view, a high percentage of workers in state owned enterprises are redundant and unemployed in a disguised manner. These workers have to be laid off for the sake of efficiency. I argue that much of the disguised unemployment in the state sector may be due to insufficient aggregate demand rather than technical inefficiency. My econometric analyses find that an increase in aggregate demand leads to substantially higher productivity in the state owned enterprises, allowing a substantial part of the redundant labor force to be efficiently employed. I argue for active aggregate demand policy rather than layoff of workers as the primary solution to the problem of disguised unemployment.

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This dissertation offers and tests a theory regarding the source of asymmetric cross-correlation in size-based portfolio returns and variances. This 'information transfer' theory states that large firm portfolio returns may 'lead' those of small firm portfolios because large firm stock prices contain 'better quality' information versus small firm stocks, and are thus used as information signals by investors in smaller firm stocks. The theory is contrasted against the transaction cost theory, as offered by Cohen, et al. (1980, 1983) and Mech (1990), which states that cross-correlations in portfolio returns obtain because of differential transaction costs among size-based portfolios. / These competing theories are tested by studying the cross-correlation characteristics of portfolios formed by proxies for information content of securities (size and relative trading volume) and transaction costs (share price and bid/ask spread). Tests performed include studies of simple cross-correlation patterns of portfolios formed controlling alternately for information quality and transaction cost proxies in weekly and daily returns, cross-mean and cross-variance influence tests using univariate and multivariate GARCH-M models and tests regarding theory implications for large magnitude returns. / Results support the conclusion that information quality and transaction costs both play a role in the cross-correlation patterns of size-based portfolios. Both simple cross-correlation patterns and multivariate parameter estimates support this conclusion. However, no evidence was found that return variances are consistently predictable among portfolios nor that large magnitude returns for leading portfolios are followed by quicker price adjustments by lagging portfolios than small magnitude returns. The finding that the quality of information available for securities plays a role in the asymmetric predictability of stock returns is the unique contribution of this work. / Source: Dissertation Abstracts International, Volume: 55-09, Section: A, page: 2933. / Major Professor: David R. Peterson. / Thesis (Ph.D.)--The Florida State University, 1994.

Heterogeneity of valuation for a firm implies an upwardly sloped supply curve for a firm's stock. This has several implications for mergers and acquisitions. Firms with greater heterogeneity are expected to have more steeply sloped supply curves. It is therefore expected that as heterogeneity increases, a target firm's shareholders must be offered a greater premium to induce them to sell. / Heterogeneity of valuation may affect other aspects of merger and acquisition activity, as well. Bidders should prefer to acquire low heterogeneity targets, ceteris paribus. If bidders do not consider heterogeneity in bidding, bids for high heterogeneity targets are expected to fail more frequently than bids for low heterogeneity targets. / Heterogeneous valuation of the bidder may also affect takeovers. If there is wide disagreement over the value of bidder securities, then it may be difficult to negotiate an acquisition agreement using bidder securities as consideration. Cash should be a more suitable form of payment when bidder heterogeneity is high. / Empirical results are mixed. A positive relationship between dispersion of analysts' forecasts and premiums paid to targets shareholders is found only for firms contesting a takeover. The strongest influence of heterogeneity is found in target selection. Firms with greater dispersion of analysts' forecast are more likely to become targets than firms with lower dispersion. Alternative explanations for the results are considered. / Source: Dissertation Abstracts International, Volume: 55-09, Section: A, page: 2930. / Major Professor: James S. Ang. / Thesis (Ph.D.)--The Florida State University, 1994.

This study examines whether there are contagion effects and shifts in systematic risk for life insurance industry co-members regarding information releases and subsequent failures of First Executive Corporation, First Capital Holdings Corporation, Monarch Capital Corporation, and Mutual Benefit Life Insurance Company. During the Spring and Summer of 1991, each of these companies either asked for voluntary protection or was involuntarily taken over by state insurance regulators. / The capital market response regarding financial instability and subsequent failures of the four subject life insurers is analyzed for three portfolios of life insurance industry co-members. The three portfolios consist of New York and American Stock Exchange life insurance companies, National Association of Security Dealers' Automated Quotation System life insurance companies, and New York and American Stock Exchange multi-line insurance companies. / A dummy variable technique is used to calculate unexpected security returns for specified event days. The event days correspond to the information releases for the four failed life insurers. / The results support the general conclusion that contagion effects and shifts in systematic risk were not found for the three portfolios of life insurance industry co-members. / Source: Dissertation Abstracts International, Volume: 54-11, Section: A, page: 4199. / Major Professor: Richard B. Corbett. / Thesis (Ph.D.)--The Florida State University, 1993.