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
Publisher
Cambridge University Press
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
Copyright © School of Business Administration, University of Washington 2008
Full-text Version
Publisher’s Version
Language
English
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