Managerial Ownership and the Role of Privatization in Transition Economies: The Case of China

20 Pages Posted: 8 Aug 2012

See all articles by Liu Wang

Liu Wang

Providence College - School of Business

William Q. Judge

Old Dominion University

Date Written: August 7, 2012

Abstract

Within transition economies, a popular tactic for revitalizing large and inefficient stateowned enterprises (SOEs) is to privatize them. Unfortunately, the empirical evidence related to this issue is equivocal. This study, therefore, explores more deeply what the relationship may be between privatization efforts of SOEs and their financial performance in transition economies. Specifically, we seek to better understand whether privatization reforms per se, or other corporate governance mechanisms that complement or substitute for this effort, are most effective. Using a panel sample of Chinese state-owned public firms over an eight year period from 1999 to 2006, we find that managerial ownership has a more significant impact on firm performance than privatization does. This finding suggests that internal incentives to managers may be more effective than external market mechanisms in economies transitioning from centralized planning to market control. Our results are robust using a wide variety of performance measures and different model specifications.

Keywords: Privatization, Managerial Ownership, Agency Perspective, Institutional Environment, Economic Transition, China

JEL Classification: G34

Suggested Citation

Wang, Liu and Judge, William Q., Managerial Ownership and the Role of Privatization in Transition Economies: The Case of China (August 7, 2012). Asia Pacific Journal of Management, Vol. 29, p. 479, 2012, Available at SSRN: https://ssrn.com/abstract=2126212

Liu Wang (Contact Author)

Providence College - School of Business ( email )

Department of Finance, School of Business
Providence College
Providence, RI 02918
United States
401-865-1883 (Phone)

William Q. Judge

Old Dominion University ( email )

Norfolk, VA 23529-0222
United States
7576836730 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
91
Abstract Views
805
rank
338,030
PlumX Metrics