Ownership Structure and Firm Value in China's Privatized Firms: 1991-2001
43 Pages Posted: 27 Oct 2007
This paper investigates the relation between ownership structure and firm value across a sample of 5,284 firm years of China's partially privatized former state-owned enterprises (SOE) from 1991-2001. We find that state and institutional shares are significantly negatively related to Tobin's Q, and that significant convex relations exist between Q and state shares, as well as between Q and institutional shares. We also find that foreign ownership is significantly positively related to Tobin's Q. We test for potential endogeneity of ownership, and find that Q and state/foreign ownership are not jointly determined. We also test for time-series, industry, and geo-economic location effects, and find our results to be robust.
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