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Crossing the River by Touching Stones?: The Reform of Corporate Ownership in China

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  • Wenwen Zhan

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  • John Turner

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Abstract

The privatization of Chinese enterprises in a low-legal-protection environment raises the question as to how minority shareholders are assured that their capital will not be expropriated. This paper sheds some light on this issue by examining the influence of controlling shareholders on the corporate performance of listed firms from 1997 to 2006. The first main finding is that firms controlled by local governments are more valuable to minority shareholders, whereas firms controlled by individuals are less valuable. The second main finding is that the post-WTO-accession relinquishment of control from local governments to private shareholders appears to have reduced corporate performance. Copyright Springer Science+Business Media, LLC. 2012

Suggested Citation

  • Wenwen Zhan & John Turner, 2012. "Crossing the River by Touching Stones?: The Reform of Corporate Ownership in China," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 19(3), pages 233-258, September.
  • Handle: RePEc:kap:apfinm:v:19:y:2012:i:3:p:233-258
    DOI: 10.1007/s10690-011-9148-2
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    More about this item

    Keywords

    Protection of minority shareholders; Partial privatization; China; Insider expropriation; G32; G34; L33; P31;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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