Corruption in Chinese Privatizations

54 Pages Posted: 6 May 2014

See all articles by Raymond J. Fisman

Raymond J. Fisman

National Bureau of Economic Research (NBER); Boston University

Yongxiang Wang

University of Southern California - Marshall School of Business

Date Written: May 2014


We document evidence of corruption in Chinese state asset sales. These sales involved stakes in partially privatized firms, providing a benchmark - the price of publicly traded shares - to measure underpricing. Underpricing is correlated with deal attributes associated with misgovernance and corruption. Sales by "disguised" owners that misrepresent their state ownership to elude regulatory scrutiny are discounted 5-7 percentage points more than sales by other owners; related party transactions are similarly discounted. Analysis of subsequent operating performance provides suggestive evidence that aggregate ownership transfers improve profitability, though not in cases where the transfers themselves were corrupted.

Suggested Citation

Fisman, Raymond and Wang, Yongxiang, Corruption in Chinese Privatizations (May 2014). NBER Working Paper No. w20090, Available at SSRN:

Raymond Fisman (Contact Author)

National Bureau of Economic Research (NBER)

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Boston University ( email )

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Yongxiang Wang

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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