Free cash flow productivity among Chinese listed companies: A comparative study of SOEs and non-SOEs

Abstract

This paper investigates the free cash flow productivity of SOEs compared with non-SOEs and examines its possible determinants. We find that SOEs have slightly weak free cash flow productivity but significantly stronger than non-SOEs. Similar performance exists among commercial class I and II SOEs and public-benefit SOEs. Further analyses suggest that firm size, age, sales growth, ownership concentration, government subsidies, and industry monopoly factors cannot explain this phenomenon. The common driver for all types of SOEs to generate stronger free cash flows than non-SOEs is their stronger expense control capability.

Keywords

• Free cash flow productivity
• State-owned enterprises
• Non-state-owned enterprises
• SOE classification reform