Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?

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Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?

Author Info

Lihui Tian
Saul Estrin ()

Additional information is available for the following registered author(s):

Lihui George Tian

Abstract

The role of government shareholding in corporate performance is central to an understanding of China’s newly privatized large firms. In this paper, we analyze shareholders as agents that can both harm and benefit companies. We examine the ownership structure of 826 listed corporations and find that government shareholding is surprisingly large. Its effect on corporate value is found to be negative, but non-monotonic. Up to a certain threshold, corporate value decreases as government shareholding stakes increase, but beyond this corporate value begins to increase. We interpret this in terms of ownership concentration and the advantages of government partiality.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number wp750.

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Date of creation: 01 Feb 2005
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Handle: RePEc:wdi:papers:2005-750

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Paper
- Tian, Lihui & Estrin, Saul, 2005. "Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?," IZA Discussion Papers 1493, Institute for the Study of Labor (IZA). [Downloadable!]
- Estrin, Saul & Tian, Lihui, 2005. "Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?," CEPR Discussion Papers 4919, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

This paper has been announced in the following NEP Reports:

NEP-ACC-2005-03-13 (Accounting & Auditing)
NEP-ALL-2005-03-13 (All new papers)
NEP-FIN-2005-03-13 (Finance)
NEP-SEA-2005-03-13 (South East Asia)
NEP-TRA-2005-03-13 (Transition Economics)

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