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Government Shareholding and the Value of China's Modern Firms

Author

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  • Lihui Tian

Abstract

This paper documents the ultimate shareholding structures of 826 corporations listed on China's stock market and finds large equity holdings of the government. Using a panel data set, this paper further finds that corporate value decreases with an increased size of government shareholding when the government is a small shareholder. When the government equity holding is sufficiently large, corporate value increases with increased government shareholding. This U-shaped relationship between government shareholding and corporate value is interpreted by the aggregated impacts of the grabbing and helping hands of the government shareholder.

Suggested Citation

  • Lihui Tian, 2001. "Government Shareholding and the Value of China's Modern Firms," William Davidson Institute Working Papers Series 395, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2001-395
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39779/3/wp395.pdf
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    Cited by:

    1. Yuan George Shan & Ron P. McIver, 2011. "Corporate governance mechanisms and financial performance in China: panel data evidence on listed non financial companies," Asia Pacific Business Review, Taylor & Francis Journals, vol. 17(3), pages 301-324, July.
    2. Qi Quan & Nancy Huyghebaert, 2005. "Share Issuing Privatizations in China: Determinants of Public Share Allocation and Underpricing," LICOS Discussion Papers 16205, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    3. Farhad Shahveisi & Farshid Khairollahi & Mohammad Alipour, 2017. "Does ownership structure matter for corporate intellectual capital performance? An empirical test in the Iranian context," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(1), pages 67-91, April.
    4. Luo, Bei & Chong, Terence Tai Leung, 2016. "Entrepreneurial Activities and Institutional Environment in China," MPRA Paper 63395, University Library of Munich, Germany.
    5. repec:bla:apacel:v:30:y:2016:i:2:p:90-104 is not listed on IDEAS
    6. Klein, Paul-Olivier & Weill, Laurent, 2015. "Is it worth issuing bonds in China? Evidence from stock market reactions," BOFIT Discussion Papers 33/2015, Bank of Finland, Institute for Economies in Transition.
    7. Amy Kam & David Citron & Gulnur Muradoglu, 2010. "Financial distress resolution in China – two case studies," Qualitative Research in Financial Markets, Emerald Group Publishing, vol. 2(2), pages 46-79, June.
    8. Rim Ben Hassen & Omri Abdelwahed, 2014. "Privatization of Tunisian Companies: A Study of Corporate Governance Mechanisms," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 94-104, April.
    9. Homayara Latifa Ahmed & Md. Jahangir Alam & Saeed Alamgir Jafar & Sawlat Hilmi Zaman, 2008. "A Conceptual Review on Corporate Governance and its Effect on Firm's Performance: Bangladesh Perspective," AIUB Bus Econ Working Paper Series AIUB-BUS-ECON-2008-10, American International University-Bangladesh (AIUB), Office of Research and Publications (ORP), revised Mar 2008.
    10. Guy S. Liu & Pei Sun, 2005. "The Class of Shareholdings and its Impacts on Corporate Performance: a case of state shareholding composition in Chinese public corporations," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(1), pages 46-59, January.
    11. Yuan Ding & Hua Zhang & Junxi Zhang, 2007. "Private vs State Ownership and Earnings Management: evidence from Chinese listed companies," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 223-238, March.
    12. Huyghebaert, Nancy & Quan, Qi, 2009. "Share issuing privatizations in China: Sequencing and its effects on public share allocation and underpricing," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 306-320, June.
    13. Gang Wei, 2007. "Ownership Structure, Corporate Governance and Company Performance in China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 13(4), pages 519-545, October.
    14. Kurt Hess & Abeyratna Gunasekarage & Martin Hovey, 2010. "State-dominant and non-state-dominant ownership concentration and firm performance: Evidence from China," International Journal of Managerial Finance, Emerald Group Publishing, vol. 6(4), pages 264-289, September.
    15. Liu, Jianlei & Uchida, Konari & Gao, Ruidong, 2012. "Political connections and the long-term stock performance of Chinese IPOs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 814-833.
    16. Yuan Chen & Michael Young, 2010. "Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective," Asia Pacific Journal of Management, Springer, vol. 27(3), pages 523-539, September.
    17. Raymond Fisman & Yongxiang Wang, 2015. "Corruption in Chinese Privatizations," Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(1), pages 1-29.
    18. Bachiller Patricia, 2012. "The Impact of Privatization on Economic Performance in European Companies," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 18(1), pages 1-22, May.
    19. Wei Huang & Agyenim Boateng, 2013. "The role of the state, ownership structure, and the performance of real estate firms in China," Applied Financial Economics, Taylor & Francis Journals, vol. 23(10), pages 847-859, May.
    20. repec:bof:bofitp:urn:nbn:fi:bof-201601071000 is not listed on IDEAS

    More about this item

    Keywords

    ownership structure; government shareholding; corporate governance;

    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
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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