Retained State Shareholding in Chinese Plcs: Does Government Ownership Reduce Corporate Value?

50 Pages Posted: 15 Jun 2005

See all articles by Saul Estrin

Saul Estrin

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Lihui Tian

Nankai University; University of London; Peking University - Department of Finance

Multiple version iconThere are 3 versions of this paper

Date Written: February 2005

Abstract

The role of government shareholding in corporate performance is central to an understanding of China's newly privatized large firms and the stock market. In this paper, we analyze shareholders as agents that can both harm and benefit companies. We examine the ownership structure of 826 listed corporations and find that government shareholding is surprisingly large. Its effect on corporate value is found to be negative, but non-monotonic. Up to a certain threshold, corporate value decreases as government shareholding stakes increase, but beyond this corporate value begins to increase. We interpret this in terms of ownership concentration and the advantages of government partiality.

Keywords: Government shareholding, corporate governance, China

JEL Classification: G15, G32, G34, L33

Suggested Citation

Estrin, Saul and Tian, George Lihui, Retained State Shareholding in Chinese Plcs: Does Government Ownership Reduce Corporate Value? (February 2005). Available at SSRN: https://ssrn.com/abstract=743169

Saul Estrin (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

George Lihui Tian

Nankai University ( email )

Tianjin, 300071
China

University of London ( email )

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London, WC1E 7HU
United Kingdom

Peking University - Department of Finance ( email )

No. 38 Xueyuan Road
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Beijing, Beijing 100871
China
+86 10 6275 7900 (Phone)
+86 10 6275 14763 (Fax)

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