The reversal of privatization in China: A political economy perspective

Zhangkai Huang, Lixing Li, Guangrong Ma and Jun Qian

Journal of Corporate Finance, 2021, vol. 71, issue C

Abstract: We document reversals of privatization in China—local governments re-possessing ownership stakes in a quarter of previously privatized firms during 1998–2007, a period when the privatization process was still ongoing. This type of ownership restructuring helped ease the unemployment burden in the local labor markets, and was more likely to occur in firms located in provinces led by an official without strong political status in the Chinese Communist Party. A reversal in privatization led to higher leverage, lower profitability and lower labor productivity. Our paper sheds light on how frictions in the political structure affect the implementation of economic policies in a top-down system.

Keywords: Privatization; Reversal; Political status; Profitability; Unemployment (search for similar items in EconPapers)
JEL-codes: G32 H11 L22 P31 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:71:y:2021:i:c:s0929119921002376

DOI: 10.1016/j.jcorpfin.2021.102115

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