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From State to State: Quasi‐privatization and Firm Performance

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  • Kun Wang

Abstract

This paper uses a sample of Chinese listed companies whose controlling shareholders have changed from government agencies to state‐owned enterprises (SOEs), to examine whether reducing government intervention while maintaining government's ultimate control could improve firm performance. The results show that the overall performance of these firms improves after the transfer of their controlling shareholders, due to improvements in both operating and non‐operating performance. When we separate all samples into solely SOEs and other SOEs based on the controlling shareholder, we find that operating performance improved significantly in the solely SOE group, whereas non‐operating performance improved significantly in the SOE group. In addition, we identify sources of performance improvement from two perspectives: corporate governance and related party transactions. The results imply that the Chinese Government should continue to decentralize control and, at the same time, continue to monitor firm operating efficiency.

Suggested Citation

  • Kun Wang, 2009. "From State to State: Quasi‐privatization and Firm Performance," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(5), pages 52-68, September.
    • Handle: RePEc:bla:chinae:v:17:y:2009:i:5:p:52-68
    DOI: 10.1111/j.1749-124X.2009.01166.x
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    References listed on IDEAS

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    Cited by:

    1. Huang, Zhangkai & Wang, Kun, 2011. "Ultimate privatization and change in firm performance: Evidence from China," China Economic Review, Elsevier, vol. 22(1), pages 121-132, March.

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