The Financial and Operating Performance of China's Newly Privatized Firms

Financial Management, Vol. 32, No. 2, p. 107-126, Summer 2003

21 Pages Posted: 14 Aug 2003 Last revised: 13 Nov 2010

See all articles by Zuobao Wei

Zuobao Wei

University of Texas at El Paso

Oscar Varela

University of New Orleans - College of Business Administration - Department of Economics and Finance

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Juliet D'Souza

Clayton State University - Department of Finance & Economics

Date Written: September 10, 2010

Abstract

This study examines the pre- and post-privatization financial and operating performance of 208 firms privatized in China during the period 1990-97. The full sample results show significant improvements in real output, real assets, and sales efficiency, and significant declines in leverage following privatization, but no significant change in profitability. Further analysis shows that privatized firms experience significant improvements in profitability compared to fully state-owned enterprises during the same period. Firms in which more than 50 percent voting control is conveyed to private investors via privatization experience significantly greater improvements in profitability, employment, and sales efficiency compared to those that remain under the state's control. Privatization seems to work in China, especially the more private firms become.

Suggested Citation

Wei, Zuobao and Varela, Oscar and Hassan, M. Kabir and D'Souza, Juliet, The Financial and Operating Performance of China's Newly Privatized Firms (September 10, 2010). Financial Management, Vol. 32, No. 2, p. 107-126, Summer 2003, Available at SSRN: https://ssrn.com/abstract=410402

Zuobao Wei (Contact Author)

University of Texas at El Paso ( email )

500 W. University Ave.
El Paso, TX 79968
United States
915-747-5381 (Phone)
915-747-6282 (Fax)

Oscar Varela

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Juliet D'Souza

Clayton State University - Department of Finance & Economics ( email )

5900 North Lee Street
Morrow, GA 30260
United States
770-961-3410 (Phone)

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