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Privatization effect versus listing effect: Evidence from China

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  • Li, Bo
  • Megginson, William L.
  • Shen, Zhe
  • Sun, Qian

Abstract

Previous studies show that profitability does not improve after share issue privatization (SIP) in China. We explore the possibility that the positive privatization effect can be overwhelmed by a negative listing effect, leading to an overall negative or insignificant SIP profitability change. Using the difference-in-differences approach with various matched samples, we show that there is a positive privatization effect and there is a negative listing effect on profitability. We also document evidence of a significant improvement in profitability after separating the “pure” privatization effect from the SIP effect. Our findings are robust to alternative variable specifications and methodological changes.

Suggested Citation

  • Li, Bo & Megginson, William L. & Shen, Zhe & Sun, Qian, 2019. "Privatization effect versus listing effect: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 56(C), pages 369-394.
    • Handle: RePEc:eee:pacfin:v:56:y:2019:i:c:p:369-394
    DOI: 10.1016/j.pacfin.2019.07.001
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    More about this item

    Keywords

    Privatization; Listing; Difference-in-differences; Government policy and regulation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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