Supervision and Misallocation : Evidence from China's State-Owned Enterprise Reform

We extend Hsieh and Klenow’s classic misallocation model and examine how the establishment of the CHINA SASAC has affected the resource allocation of Chinese state-owned enterprises from a macro perspective. The findings indicate that the establishment of the CHINA SASAC has reduced the factor market distortion of Chinese state-owned enterprises and improved their resource allocation efficiency, considering their endogenous nature. We provide new research methods for and perspectives on resource allocation research and policy evaluation, while also supplementing the research on China’s state-owned enterprise reform