Title

Control transfers, privatization, and corporate performance : efficiency gains in China's listed companies

Document Type

Journal article

Source Publication

Journal of Financial and Quantitative Analysis

Publication Date

3-1-2008

Volume

43

Issue

1

First Page

161

Last Page

190

Abstract

We investigate performance effects for China's listed firms when there is a change in the controlling shareholder. These changes include ownership transfers from one state entity to another state entity and from a state entity to a private entity. We find positive performance effects when control is passed to a private entity. In contrast, when the transfer is made to another branch of the state, there is little change in performance. The stock market responds positively to a change in control, with the largest effect observed for private transfers. Our results suggest the Chinese government should continue to sell down its share ownership in listed firms as the transfer of control to private owners enhances corporate profitability and efficiency. Moreover, to help ownership reform, China should encourage an active market for corporate control.

DOI

10.1017/S0022109000002787

Print ISSN

00221090

E-ISSN

17566916

Publisher Statement

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Full-text Version

Publisher’s Version

Recommended Citation

Chen, G., Firth, M., xin, Y., & Xu, L. (2008). Control transfers, privatization, and corporate performance: Efficiency gains in China's listed companies. Journal of Financial and Quantitative Analysis, 43(1), 161-190. doi: 10.1017/S0022109000002787