Non-credible privatization

Zhangkai Huang

Applied Economics Letters, 2006, vol. 13, issue 14, 957-959

Abstract: This paper analyzes government incentives in privatization and shows that governments' cheap talk results in non-credible policy. Ex-post, only bad firms will take a sequential strategy in privatization, which will reveal its type and lead to a price drop. These results are used to analyse China's share issue privatization plan and market reaction to it.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:13:y:2006:i:14:p:957-959

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DOI: 10.1080/13504850500426152

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