Political Considerations in the Decision of Chinese SOEs to List in Hong Kong
The Hong Kong University of Science and Technology & University of Southern California
Chinese University of Hong Kong (CUHK) - School of Accountancy
City University of Hong Kong (CityUHK) - Department of Accountancy
Journal of Accounting and Economics, Forthcoming
This paper investigates why Chinese state-owned enterprises (SOEs) with strong political connections (i.e., politically connected firms) are more likely to list overseas than non-politically connected firms. We find that connected firms’ post-overseas listing performance is worse than that of non-connected firms. This evidence suggests that connected firms’ managers list their firms overseas for private (political) benefits. Consistent with this private benefits explanation, we further find that connected firms’ managers are more likely to receive political media coverage or a promotion to a senior government position subsequent to overseas listing than domestic listing.
Keywords: Partial privatization, China, Overseas listing, Political connection
JEL Classification: G34, L33, P31Accepted Paper Series
Date posted: August 14, 2008 ; Last revised: October 7, 2011
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