Privatization's Impacts on State-Owned Enterprises: A Tale of Zombie versus Healthy Firms

Ruiting Wang, Xue Wang, Gang Xu and Tao Zha

No 32795, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the effects of privatization on zombie versus healthy state-owned enterprises (SOEs) in China, extending our analysis beyond TFP to a broad array of financial and economic indicators. Privatizing zombie SOEs enhances labor productivity and TFP, reduces bank and government subsidies, alleviates leverage and administrative expenses, improves liquidity, boosts profits, and accelerates sales growth. These benefits are more pronounced than for healthy SOEs and are robust across regions and industries. Our findings offer policy implications for emerging markets, suggesting that prioritizing the privatization of underperforming, zombie-like entities can lead to substantial economic improvements and greater efficiency.

JEL-codes: D22 L21 L33 P31 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-cna, nep-eff, nep-fdg, nep-ind, nep-reg and nep-sbm
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