Corruption and privatization: Evidence from a natural experiment in China

Ling Zhu and Dongmin Kong

Economics of Transition and Institutional Change, 2023, vol. 31, issue 1, 217-239

Abstract: This paper investigates how government corruption shapes state‐owned enterprises' (SOEs) privatization. To establish causality, we exploit a natural experiment (i.e., the investigations of the Central Commission for Discipline Inspection) to document that SOEs significantly deepen privatization after the crackdown on corruption. Further evidence demonstrates two plausible mechanisms driving our findings. Specifically, anti‐corruption campaign: 1) accelerates privatization process by curbing the underpricing transfers to state entities and encouraging the normal transfers to private entities or individuals; and 2) by reducing managers' incentives to maintain the dominance of state ownership for expropriation through the discretion of perk consumption. Moreover, our findings are particularly pronounced for SOEs located in areas with high levels of social trust, government intervention, and less information asymmetry.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1111/ecot.12331

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ectrin:v:31:y:2023:i:1:p:217-239

Access Statistics for this article

More articles in Economics of Transition and Institutional Change from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().