Profiting from government stakes in a command economy: Evidence from Chinese asset sales
AbstractWe examine the market response to an unexpected announcement of the sale of government-owned shares in China. In contrast to earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect from the policy's cancellation. We suggest that this results from the absence of a Chinese political transition to accompany economic reforms, so that the benefits of political ties outweigh the efficiency costs of government shareholdings. Companies managed by former government officials have positive abnormal returns, suggesting that personal ties can substitute for government ownership as a source of connections.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Financial Economics.
Volume (Year): 96 (2010)
Issue (Month): 3 (June)
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Web page: http://www.elsevier.com/locate/inca/505576
Privatization Government ownership Political connections Chinese economy;
Other versions of this item:
- Charles Calomiris & Raymond Fisman & Yongxiang Wang, 2008. "Profiting from Government Stakes in a Command Economy: Evidence from Chinese Asset Sales," NBER Working Papers 13774, National Bureau of Economic Research, Inc.
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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