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Change of Control and the Success of China's Share Issue Privatization


Peter L. Rousseau


Vanderbilt University - Department of Economics

Sheng Xiao


Westminster College (Utah)

June 2007


Abstract:     
Using two newly available datasets of listed firms covering the period from 1994 to 2003, we test if share-issue privatization, defined here as the change of corporate control from the State to private owners rather than the IPO event as in earlier studies, improved firm performance in China. To illustrate how privatization may have worked, we develop a sequential model of interaction between the government and firm managers in which optimal ownership shares emerge in equilibrium. Our econometric analysis then shows that, in keeping with the model, privatization did improve firm profitability and the productivity of labor.

Number of Pages in PDF File: 35

Keywords: state owned enterprises, profitability, event study

JEL Classification: G1, G3

working papers series


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Date posted: December 19, 2006  

Suggested Citation

Rousseau, Peter L. and Xiao, Sheng, Change of Control and the Success of China's Share Issue Privatization (June 2007). Available at SSRN: http://ssrn.com/abstract=952531 or http://dx.doi.org/10.2139/ssrn.952531

Contact Information

Peter L. Rousseau (Contact Author)
Vanderbilt University - Department of Economics ( email )
Box 1819 Station B
Nashville, TN 37235
United States
615-343-2466 (Phone)
615-343-8495 (Fax)
HOME PAGE: http://www.vanderbilt.edu/econ/faculty/rousseau.html
Sheng Xiao
Westminster College (Utah) ( email )
1840 South 1300 East
Salt Lake City, UT 84105
United States
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