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China’s secondary privatization and corporate investment efficiency

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  • Huang, Ke
  • Zhu, Ying

Abstract

This study exploits China’s secondary privatization initiated by the Split-Share Structure Reform as an identification strategy to investigate whether and how ownership type affects corporate investment efficiency. We show that compared with the always state-owned enterprises, the investment efficiency of privatized firms improves significantly after privatization. We further find that the alleviation of government intervention and agency problems are channels through which privatization improves corporate investment efficiency. Moreover, privatization mitigates over-investment through the financing channel. The efficiency-improving effect is more pronounced in industries with higher market competition, and regions that are more market-oriented.

Suggested Citation

  • Huang, Ke & Zhu, Ying, 2022. "China’s secondary privatization and corporate investment efficiency," Research in International Business and Finance, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:riibaf:v:61:y:2022:i:c:s0275531922000393
    DOI: 10.1016/j.ribaf.2022.101651
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    More about this item

    Keywords

    Privatization; Investment efficiency; The political view; The managerial view; Financial constraints;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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