The Reversal of Privatization: Determinants and Consequences

45 Pages Posted: 5 Nov 2013 Last revised: 3 Apr 2015

See all articles by Zhangkai Huang

Zhangkai Huang

Tsinghua University - School of Economics & Management

Lixing Li

Peking University - China Center for Economic Research (CCER)

Guangrong Ma

Peking University; Renmin University of China - School of Finance

Jun Qian

Fanhai International School of Finance, Fudan University; University of Pennsylvania - Wharton Financial Institutions Center

Multiple version iconThere are 2 versions of this paper

Date Written: April 2, 2015

Abstract

We document large-scale reversal of privatization in China — local government re-possessing controlling ownership stakes in previously privatized firms during the period 1999-2007. Privatized firms are ‘re-nationalized’ to ease the burden of unemployment in the local market. Firms located in provinces with newly appointed, top-ranked Communist Party leaders who are not affiliated with any of the dominant political factions are more likely to be re-nationalized. With a number of instrument variables including the political status of the top-ranked provincial Party leader, we find that re-nationalization leads to lower profitability and labor productivity, and does not appear to have any long-term economic benefits in the region.

Keywords: re-nationalization, privatization, political faction, unemployment, productivity

JEL Classification: G32, H11, P31, L22

Suggested Citation

Huang, Zhangkai and Li, Lixing and Ma, Guangrong and Qian, Jun, The Reversal of Privatization: Determinants and Consequences (April 2, 2015). Available at SSRN: https://ssrn.com/abstract=2350053 or http://dx.doi.org/10.2139/ssrn.2350053

Zhangkai Huang

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

Lixing Li

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, 100871
China

Guangrong Ma

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Renmin University of China - School of Finance

Ming De Main Building
Renmin University of China
Beijing, Beijing 100872
China

Jun Qian (Contact Author)

Fanhai International School of Finance, Fudan University ( email )

Shanghai
China
86-21-63895501 (Phone)
86-21-62934572 (Fax)

HOME PAGE: http://www.fisf.fudan.edu.cn/show-65-69.html

University of Pennsylvania - Wharton Financial Institutions Center

2306 Steinberg Hall-Dietrich Hall
Philadelphia, PA 19104
United States

HOME PAGE: http://fic.wharton.upenn.edu/fic/

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