Control transfers, privatization, and corporate performance : efficiency gains in China's listed companies

Gongmeng CHEN, Michael Arthur FIRTH, Yu XIN, Liping XU

Research output: Journal PublicationsJournal Article (refereed)

99 Citations (Scopus)

Abstract

We investigate performance effects for China's listed firms when there is a change in the controlling shareholder. These changes include ownership transfers from one state entity to another state entity and from a state entity to a private entity. We find positive performance effects when control is passed to a private entity. In contrast, when the transfer is made to another branch of the state, there is little change in performance. The stock market responds positively to a change in control, with the largest effect observed for private transfers. Our results suggest the Chinese government should continue to sell down its share ownership in listed firms as the transfer of control to private owners enhances corporate profitability and efficiency. Moreover, to help ownership reform, China should encourage an active market for corporate control.
Original languageEnglish
Pages (from-to)161-190
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Volume43
Issue number1
DOIs
Publication statusPublished - 1 Mar 2008

Fingerprint

Listed companies
Efficiency gains
China
Privatization
Corporate performance
Stock market
Controlling shareholders
Market for corporate control
Profitability
Ownership
Private transfers
Share ownership
Ownership change
Owners
Government

Cite this

CHEN, Gongmeng ; FIRTH, Michael Arthur ; XIN, Yu ; XU, Liping. / Control transfers, privatization, and corporate performance : efficiency gains in China's listed companies. In: Journal of Financial and Quantitative Analysis. 2008 ; Vol. 43, No. 1. pp. 161-190.
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Control transfers, privatization, and corporate performance : efficiency gains in China's listed companies. / CHEN, Gongmeng; FIRTH, Michael Arthur; XIN, Yu; XU, Liping.

In: Journal of Financial and Quantitative Analysis, Vol. 43, No. 1, 01.03.2008, p. 161-190.

Research output: Journal PublicationsJournal Article (refereed)

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