The Impact of Residual Government Ownership in Privatized Firms: New Evidence from China

32 Pages Posted: 16 May 2011 Last revised: 30 Aug 2011

See all articles by Jing Liao

Jing Liao

Massey University

Martin R. Young

Massey University - School of Economics and Finance

Date Written: May 15, 2011

Abstract

This study investigates the determinants of residual government ownership and the impact of such ownership on post-privatization performance in China. Using panel data on 514 firms for the period from 1999 to 2004, the similar sample period with previous studies, we find that government shareholders are more likely to be present in small firms, while large firms are more likely to have politically connected CEOs on their boards. Contrary to the "political interference" hypothesis, our results show that residual government ownership has a positive impact on Tobin’s Q. This study indicates that when the risk of expropriation by parent companies is high, government shareholders can add value to firms by signaling their commitment to privatization.

Keywords: Government ownership, determinants, performance, China

JEL Classification: G34, G38

Suggested Citation

Liao, Jing and Young, Martin R., The Impact of Residual Government Ownership in Privatized Firms: New Evidence from China (May 15, 2011). 24th Australasian Finance and Banking Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1842643 or http://dx.doi.org/10.2139/ssrn.1842643

Jing Liao (Contact Author)

Massey University ( email )

Private Bag 11 222
Palmerston North, Manawatu 4442
New Zealand

Martin R. Young

Massey University - School of Economics and Finance ( email )

Private Bag 11222
Palmerston North, 4442
New Zealand

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