Abstract
This chapter provides a descriptive analysis of China’s privatization, by far the largest one in human history. Unlike the mass privatization in other transitional economies, China has adopted multiple approaches to privatizing its state-owned enterprises (SOEs). These approaches included share issue privatization (SIP), joint ventures with foreign firms, management buy-outs (MBO), and sales to outsiders. I examine how these different approaches may affect the incentive and ability of the new owners to restructure the firms and thus influence the outcomes of privatization programs.
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Notes
- 1.
GGX survey asks about several dimensions of corporate decision making, including the appointment of top managers, employment/layoffs and wages/compensation, corporate financial issues, production, and operations.
- 2.
There has been a growing literature that examines the relationship between corporate governance and firm performance in China’s share issue privatization. For example, Sun and Tong (2003) show that the composition of state-owned shares affects firm performance. Fan et al. (2007) find that CEOs who are former or current government officials are associated with less professionalized boards and worse firm performance. These studies, however, do not speak of the underlying mechanism for how weak corporate governance worsens the performance of China’s privatized firms.
- 3.
The only work based on the nationwide data is that by Jefferson and Su (2006). However, they did not have direct information about privatization. They inferred that privatization had occurred due to changes in the legal registration of the firms.
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Gan, J. (2009). Privatization in China: Experiences and Lessons. In: Barth, J., Tatom, J., Yago, G. (eds) China’s Emerging Financial Markets. The Milken Institute Series on Financial Innovation and Economic Growth, vol 8. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-93769-4_19
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