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The impact of residual government ownership in privatized firms: New evidence from China

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  • Liao, Jing
  • Young, Martin

Abstract

This study investigates the determinants of residual government ownership and the impact of such ownership on post-privatization performance in China. Using hand collected data, we find that government shareholders are more likely to be present in small firms, while large firms are more likely to have politically connected CEOs on their boards. Contrary to the “political interference” hypothesis, our results show that residual government ownership has a positive impact on Tobin's Q. This study indicates that when the risk of expropriation by parent companies is high, government shareholders can add value to firms by signalling their commitment to privatization.

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  • Liao, Jing & Young, Martin, 2012. "The impact of residual government ownership in privatized firms: New evidence from China," Emerging Markets Review, Elsevier, vol. 13(3), pages 338-351.
    • Handle: RePEc:eee:ememar:v:13:y:2012:i:3:p:338-351
    DOI: 10.1016/j.ememar.2012.02.004
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    Cited by:

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    2. Uddin, Md Hamid, 2016. "Effect of government share ownership on corporate risk taking: Case of the United Arab Emirates," Research in International Business and Finance, Elsevier, vol. 36(C), pages 322-339.
    3. Mai, Nhat Chi, 2020. "Impact of Residual State Ownership on Privatised Firm Performance: Evidence from Vietnamese Listed Firms," OSF Preprints j78fy, Center for Open Science.
    4. Ting, Hsiu-I & Chueh, Horace & Chang, Pang-Ru, 2017. "CEO power and its effect on performance and governance: Evidence from Chinese banks," Emerging Markets Review, Elsevier, vol. 33(C), pages 42-61.
    5. Manh Hoang Nguyen & Thi Quy Vo, 2022. "Residual State Ownership and Firm Performance: A Case of Vietnam," JRFM, MDPI, vol. 15(6), pages 1-28, June.
    6. Liu, Yu & Sah, Nilesh & Ullah, Barkat & Wei, Zuobao, 2020. "Financing patterns in transition economies: Privatized former SOEs versus ab initio private firms," Emerging Markets Review, Elsevier, vol. 43(C).
    7. Leo Vashkor Dewri, 2022. "A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2718-2759, December.
    8. Zeitun Rami, 2014. "Corporate Governance, Capital Structure and Corporate Performance: Evidence from GCC Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 75-96, April.
    9. Xin Li & Qiong Xu & Fei Guo & Hecheng Wang, 2023. "State‐owned equity participation and private sector enterprises' strategic risk taking: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1107-1124, March.
    10. Giannopoulos, George & Degiannakis, Stavros & Holt, Andrew & Pongpoonsuksri, Teerapon, 2018. "The Impact of the 2007 Global Financial Crisis on IPO Performance in Asian-Pacific Emerging Markets," MPRA Paper 96269, University Library of Munich, Germany.
    11. Restrepo-Ochoa, Diana Constanza & Peña, Juan Ignacio, 2020. "The impact of forced divestments on parent company stock prices: Buy on the rumor, sell on the news?," Research in International Business and Finance, Elsevier, vol. 53(C).
    12. Liu, Yu & Xu, Jian, 2022. "Residual state ownership, foreign ownership and firms' financing patterns," Emerging Markets Review, Elsevier, vol. 51(PA).

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    More about this item

    Keywords

    Government ownership; Determinants; Performance; China;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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