State Ownership, Institutional Ownership and Relationship with Firm Performance: Evidence from Chinese Public Listed Firms

State ownership and institutional ownership both play important roles in Chinese public listed firms. This study tests empirically the impacts of state ownership and institutional ownership on firm performance in China, using a large sample for the period of 2008 to 2014. It finds that there is a U-shape relationship between state ownership and firm performance. The results that reveal in most situations, state ownership has negative influences on firm performance because state owners pursue with political goals instead of profit maximization. This study also finds that institutional ownership is positively related to firm performance; the institutional investors have more incentives and financial competencies to monitor management therefore enhancing good firm performance.