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Corporate Control, Restructuring, and Firm Performance in China

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  • XIANG CAI
  • CHAO CHEN

Abstract

For most companies in China, especially privately owned enterprises, going public to raise external funds is very difficult. Therefore, entering the capital market through corporate control of a publicly listed firm provides a plausible channel for private firms to raise funds externally. The decision to acquire a publicly listed company in China is often motivated by buying the "shell" (opportunity of financing through public offering) of the target, instead of operation synergy. When the largest shareholder of a publicly listed firm passes his shares on to a new owner, the newly acquired firm tends to engage in large-scale corporate restructuring. This article focuses on two of the most popular ownership-restructuring strategies utilized in China's capital market: negotiated ownership transfer and ownership transfer without payment. We also examine the performance of acquired firms after the ownership change and the effects that restructuring has upon the firm

Suggested Citation

  • Xiang Cai & Chao Chen, 2004. "Corporate Control, Restructuring, and Firm Performance in China," Chinese Economy, Taylor & Francis Journals, vol. 37(3), pages 67-86, May.
  • Handle: RePEc:mes:chinec:v:37:y:2004:i:3:p:67-86
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    Cited by:

    1. Kato, Takao & Long, Cheryl, 2006. "CEO Turnover, Firm Performance and Enterprise Reform in China: Evidence from New Micro Data," IZA Discussion Papers 1914, Institute for the Study of Labor (IZA).
    2. Kato, Takao & Long, Cheryl, 2006. "CEO turnover, firm performance, and enterprise reform in China: Evidence from micro data," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 796-817, December.

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