China's Secondary Privatization: Perspectives from the Split-Share Structure Reform

56 Pages Posted: 9 Apr 2012 Last revised: 18 May 2016

See all articles by Li Liao

Li Liao

Tsinghua University - School of Economics & Management

Bibo Liu

Tsinghua University - PBC School of Finance

Hao Wang

Tsinghua University

Date Written: April 9, 2012

Abstract

The Split-Share Structure Reform granted legitimate trading rights to the state-owned shares of listed state-owned enterprises (SOEs), opening up the gate to China's secondary privatization. The expectation of privatization quickly boosted SOE output, profits, and employment, but did not change their operating efficiency and corporate governance. The improvements to SOE performance are positively correlated to government agents' privatization-led incentive of increasing state-owned share value. In terms of privatization methodology, the reform adopted a market mechanism that played an effective information discovery role in aligning the interests of the government and public investors.

Keywords: The Split-Share Structure Reform, privatization, state-owned enterprise, financial reform, market mechanism

JEL Classification: G18, G28, G30, L33

Suggested Citation

Liao, Li and Liu, Bibo and Wang, Hao, China's Secondary Privatization: Perspectives from the Split-Share Structure Reform (April 9, 2012). Journal of Financial Economics (JFE), Forthcoming, PBCSF-NIFR Research Paper No. 12-01, Available at SSRN: https://ssrn.com/abstract=2037177 or http://dx.doi.org/10.2139/ssrn.2037177

Li Liao (Contact Author)

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China
8610-62789788 (Phone)

Bibo Liu

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

Hao Wang

Tsinghua University ( email )

318 Weilun Building
Tsinghua University
Beijing, 100084
China
86 10 62797482 (Phone)
86 10 62794554 (Fax)

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