 Minority state ownership and firm performance: Evidence from the Chinese stock market crash in 2015Xiumei Liu, Fangbo Si, Chenxin Xie and Lu Xie Financial Management, 2024, vol. 53, issue 2, 291-325 Abstract: We examine the effect of minority state ownership on firm performance using the Chinese stock market crash in 2015. We find that treatment firms with minority state ownership accumulated from governmental purchases of equities experience significant reductions in operating performance. The negative impact is more severe in firms with higher riskiness and firms with less powerful large shareholders. We also find that treatment firms’ risk decreases and their employment increases after minority state shareholders step in, providing supportive evidence on the government's motives of reducing risk and preventing mass layoffs. Further tests reveal the channels through which minority state ownership impedes investment efficiency, productivity, and innovation. The negative impact diminishes when government institutions divest their shares in a timely manner. Overall, our results suggest there are unintended negative consequences of minority state ownership arising from the governmental rescue package in a market crisis. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:finmgt:v:53:y:2024:i:2:p:291-325 Ordering information: This journal article can be ordered from Access Statistics for this article Financial Management is currently edited by William G. Christie More articles in Financial Management from Financial Management Association International Contact information at EDIRC. |
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