Impact of Macro and Firm-Specific Characteristics on Postprivatization Performance

Xiangjian Zhang, Zongming Tang and Jun He

Chinese Economy, 2012, vol. 45, issue 5, 50-91

Abstract: This article investigates the performance of state-owned enterprises (SOEs) following share-issue privatization and examines how macro and firm-specific characteristics affect postprivatization performance. Our results show that the profitability of firms decreases after privatization but their output and operating efficiency increase. We found that postprivatization performance is affected by macro and micro factors. Specifically, economic growth, capital market development, institutional investors, centralized management, equity refinancing, and external audits are positively associated with postprivatization performance. However, market competition, control of large shareholders, central government control, ownership structure balance, and related-party transactions have a significantly negative impact on postprivatization performance. The findings of this article have political implications for the future direction of privatization of SOEs.

Date: 2012
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