Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?

Saul Estrin and Lihui Tian

No 4919, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The role of government shareholding in corporate performance is central to an understanding of China’s newly privatized large firms and the stock market. In this paper, we analyse shareholders as agents that can both harm and benefit companies. We examine the ownership structure of 826 listed corporations and find that government shareholding is surprisingly large. Its effect on corporate value is found to be negative, but non-monotonic. Up to a certain threshold, corporate value decreases as government shareholding stakes increase, but beyond this corporate value begins to increase. We interpret this in terms of ownership concentration and the advantages of government partiality.

Keywords: China; Corporate governance; government shareholding (search for similar items in EconPapers)
JEL-codes: G15 G32 G34 L33 (search for similar items in EconPapers)
Date: 2005-02
New Economics Papers: this item is included in nep-acc, nep-fin and nep-tra
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Citations: View citations in EconPapers (4)

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