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Discussion Paper Details

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

Author(s): Saul Estrin and Lihui Tian

Publication Date: February 2005

Keyword(s): China, corporate governance and government shareholding

Programme Area(s): Institutions and Economic Performance

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.

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Bibliographic Reference

Estrin, S and Tian, L. 2005. 'Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4919