Profiting from government stakes in a command economy: Evidence from Chinese asset sales

Charles Calomiris, Raymond Fisman and Yongxiang Wang

Journal of Financial Economics, 2010, vol. 96, issue 3, 399-412

Abstract: We examine the market response to an unexpected announcement of the sale of government-owned shares in China. In contrast to earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect from the policy's cancellation. We suggest that this results from the absence of a Chinese political transition to accompany economic reforms, so that the benefits of political ties outweigh the efficiency costs of government shareholdings. Companies managed by former government officials have positive abnormal returns, suggesting that personal ties can substitute for government ownership as a source of connections.

Keywords: Privatization; Government; ownership; Political; connections; Chinese; economy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (96)

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Working Paper: Profiting from Government Stakes in a Command Economy: Evidence from Chinese Asset Sales (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:96:y:2010:i:3:p:399-412

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