Abstract
This study examines the role of Chinese state ownership in deterring takeovers. We document state ownership's reduction in firms’ susceptibility to potential takeovers. Using staggered privatization of the state-owned shareholders of public firms, as shocks to the deterrent effect of the state, we find that state-owned shareholders can insulate their portfolio firms from potential takeovers. The deterrent effect of state ownership is concentrated in strategic industries and well-functioning assets, alleviating managerial short-termism.
| Original language | English |
|---|---|
| Article number | 106689 |
| Number of pages | 15 |
| Journal | Journal of Banking and Finance |
| Volume | 146 |
| Early online date | 28 Sept 2022 |
| DOIs | |
| Publication status | Published - Jan 2023 |
| Externally published | Yes |
Bibliographical note
We would like to thank Thorsten Beck (the editor), an associate editor, and an anonymous referee for their constructive comments. We would also like to thank Jie (Jack) He, Alexander Karaivanov, Bo Li, Dan Li, Chen Lin, Roni Michaely, Tao Shu, Xuan Tian, Tracy (Kun) Wang (discussant), Wenyu Wang, Hong Zhang, Xiaodong Zhu, seminar participants at the 2nd China Conference on Growth and Development, and the 6th International Conference on the Chinese Economy: Past, Present and Future, and Tsinghua University for their valuable comments and suggestions.Publisher Copyright:
© 2022 Elsevier B.V.
Funding
Yi Xue gratefully acknowledges financial support from the National Natural Science Foundation of China (Grant no. 71971063) and the Fundamental Research Funds for the Central Universities in UIBE (Grant no. 19JQ01).
Keywords
- Deterrence
- Privatization
- State-owned enterprises
- Takeover