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China’s secondary privatization and corporate investment efficiency

Ke Huang and Ying Zhu

Research in International Business and Finance, 2022, vol. 61, issue C

Abstract: This study exploits China’s secondary privatization initiated by the Split-Share Structure Reform as an identification strategy to investigate whether and how ownership type affects corporate investment efficiency. We show that compared with the always state-owned enterprises, the investment efficiency of privatized firms improves significantly after privatization. We further find that the alleviation of government intervention and agency problems are channels through which privatization improves corporate investment efficiency. Moreover, privatization mitigates over-investment through the financing channel. The efficiency-improving effect is more pronounced in industries with higher market competition, and regions that are more market-oriented.

Keywords: Privatization; Investment efficiency; The political view; The managerial view; Financial constraints (search for similar items in EconPapers)
JEL-codes: G31 G34 L33 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.ribaf.2022.101651

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