Political determinants of privatizations in China: A natural experiment based on politician career concerns

Zhangkai Huang, Jinyu Liu, Guangrong Ma and Lixin Xu

Journal of Corporate Finance, 2024, vol. 87, issue C

Abstract: We study the political determinants of the world's largest privatization program by exploiting an age-related discontinuity of politician promotion in China. As a local politician's age exceeds 58, his promotion likelihood quickly diminishes. Consistent with changes in the politician's incentives, we find that Chinese cities whose top officials were older than age 58 were less likely to privatize local state-owned enterprises. Using the promotion discontinuity as an instrument, we report that privatization has significant effects on the firm's efficiency.

Keywords: Privatization; Career concern; Politicians; China (search for similar items in EconPapers)
JEL-codes: D22 D23 H19 L29 P31 P39 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:87:y:2024:i:c:s0929119924000828

DOI: 10.1016/j.jcorpfin.2024.102620

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