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Privatization Through an Overseas Listing: Evidence from China’s H-Share Firms

Author

Listed:
  • Jin Jia
  • Qian Sun
  • Wilson H.S. Tong

Abstract

We study the partial privatization of 53 Chinese state-owned enterprises (by their listings on the Hong Kong Exchange over the period July 1993 to December 2002. We find that listing has led to a median increase of 70% in real net profits, 80% in real sales, 50% in capital spending, and a mild but nonsignificant improvement in coverage ratios, but no improvement in return on sales and a significant underperformance of returns against several market index benchmarks. Further investigation shows that firm performance is negatively related to state ownership, but positively related to legal-personal ownership and foreign ownership.

Suggested Citation

  • Jin Jia & Qian Sun & Wilson H.S. Tong, 2005. "Privatization Through an Overseas Listing: Evidence from China’s H-Share Firms," Financial Management, Financial Management Association, vol. 34(3), Fall.
  • Handle: RePEc:fma:fmanag:jiasuntong05
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    Citations

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    Cited by:

    1. Feng Xie & Jing Chi & Jing Liao, 2016. "From share issue privatisation to non-tradable share reform: a review of privatisation in China," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 30(2), pages 90-104, November.
    2. Congsheng Wu, 2014. "Underpricing of homecoming A-share IPOs by Chinese firms already listed abroad," Review of Quantitative Finance and Accounting, Springer, vol. 43(3), pages 627-649, October.
    3. Harjeet S. Bhabra & Tong Liu & Dogan Tirtiroglu, 2008. "Capital Structure Choice in a Nascent Market: Evidence from Listed Firms in China," Financial Management, Financial Management Association International, vol. 37(2), pages 341-364, June.
    4. Teng Lin & Marion Hutchinson & Majella Percy, 2015. "Earnings management and the role of the audit committee: an investigation of the influence of cross-listing and government officials on the audit committee," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 197-227, February.
    5. Yongli Luo, 2014. "Cross-listing, managerial compensation and corporate governance," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-17, December.
    6. 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.
    7. Luo, Yongli & Fang, Fang & Esqueda, Omar A., 2012. "The overseas listing puzzle: Post-IPO performance of Chinese stocks and ADRs in the U.S. market," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 193-211.
    8. Trien Le & Amon Chizema, 2011. "State ownership and firm performance: Evidence from the Chinese listed firms," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 2(2).
    9. Laura Cabeza García & Silvia Gómez Ansón, 2012. "What Drives the Operating Performance of Privatised Firms?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(1), pages 1-27, February.
    10. Lilian Ng & Fei Wu, 2010. "Peer Effects in the Trading Decisions of Individual Investors," Financial Management, Financial Management Association International, vol. 39(2), pages 807-831, June.

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