Share issuing privatizations in China: Sequencing and its effects on public share allocation and underpricing

Huyghebaert, Nancy; Quan, Qi

doi:10.1016/j.jce.2008.12.002

Cited by 25 publications

(8 citation statements)

References 27 publications

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“…5 In this privatization program the shares of the SOEs were sold to their 4 Earle and Gehlbach (2003) analyze how participation in the Czech Mass Privatization Program affected the support of the population for the reformist government. Huyghebaert and Quan (2009) show that reputation concerns were important determinants in the selection of SOEs into Chinese SIPs. 5 Firms that were sold directly to outside investors were small, the employment size of the median firm being only 36 in 1992.…”

Section: Political Objectives In Privatization Programsmentioning

confidence: 94%

Political Selection of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data

Szentpéteri

Telegdy

2010

Economics & Politics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

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Section: Political Objectives In Privatization Programsmentioning

confidence: 94%

Political Selection of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data

Szentpéteri

Telegdy

2010

Economics & Politics

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“…Since the 1990s, many profitable SOEs have indeed been “corporatized” and introduced on the stock exchange. Thereby, the Chinese state has adopted a policy of privatizing all but the largest and strategically important SOEs and has usually retained a significant ownership stake after SIP (e.g., Huyghebaert & Quan, 2009). It was only as of 2000 that private‐controlled firms have started to float their shares on a more regular basis.…”

Section: Corporate Governance Mechanisms In Chinamentioning

confidence: 99%

“…In China, the use of stock market quota has created severe regional competition for stock listing, with stock market access depending upon the region in which a firm is located. As a result, stock market capitalization and stock liquidity diverge considerably across Chinese provinces and municipalities (e.g., Huyghebaert & Quan, 2009; Li et al., 2008; Pistor & Xu, 2005), thereby potentially influencing its effectiveness as a corporate governance mechanism.…”

Section: Development Of Hypothesesmentioning

confidence: 99%

Expropriation of Minority Investors in Chinese Listed Firms: The Role of Internal and External Corporate Governance Mechanisms

Huyghebaert

Wang

2012

Corporate Governance

Self Cite

128

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Manuscript Type: Empirical Research Question/Issue: We investigate how ownership structure, board characteristics, and regional differences in law enforcement and stock market development affect the conflict of interest between majority and minority investors in Chinese listed firms. For this purpose, we study related‐party transactions as well as labor redundancy, and classify firms as either state‐ or private‐controlled. Research Findings/Insights: We find that related‐party transactions grow more extensive as the wedge between the controlling shareholder's control rights and cash flow rights increases. Related‐party transactions also rise with voting rights held by the government in state‐controlled firms. Next, the state as controlling shareholder exacerbates labor redundancy. The control rights of the second to tenth largest investors can offset expropriation. Regarding board characteristics, we find that a larger fraction of directors affiliated with the dominant owner enlarges related‐party transactions, while large boards also increase labor redundancy in state‐controlled firms. We find only weak evidence that higher‐quality institutions help to restrain expropriation of minority investors. Theoretical/Academic Implications: In Chinese listed firms, a major conflict of interest arises between majority and minority investors. Also, the state may exercise its control rights to achieve imperative social and political objectives, to the detriment of external investors. Yet, as the stock market valuation and financial performance of state‐controlled firms rise with the fraction of shares held by the state, future research should better delineate the conditions under which state ownership is either detrimental or beneficial to firms. Next, the results indicate that governance mechanisms suggested by conventional agency theory are deficient in Chinese listed firms. Future research could therefore establish more clearly when internal and external governance mechanisms are likely to work, thereby also taking into account the identity of the controlling shareholder. Practitioner/Policy Implications: Investors should be aware that expropriation in Chinese listed firms has specific implications when the state is the controlling owner. Also, at this stage of development, independent directors and external governance mechanisms can hardly protect the best interests of minority investors. Rather, expropriation is counterbalanced when voting rights are concentrated in the hands of other large block holders. Policy makers should work on ownership restructuring, board independence, and institutional quality to better protect minority rights in Chinese listed firms.

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“…Biais & Perotti (2002) analyzed a political process of privatization in a democracy. There are also some empirical studies that test these theories, including Perotti & Guney (1993), Dewenter & Malatesta (1997), Bel (1998), Farinós et al (2007), and Huyghebaert & Quan (2009, 2011. Bel (1998) and Farinós et al (2007) offered evidence from Spain supporting staged privatization.…”

Section: Introductionmentioning

confidence: 99%

“…Bel (1998) and Farinós et al (2007) offered evidence from Spain supporting staged privatization. Huyghebaert & Quan (2009, 2011 showed many substantial differences between SIPs and private-firm IPOs. One key difference between prior literature and our theory is that prior literature studies a fully government-controlled privatization process, while we propose a market-oriented one, which is particularly relevant to developed economies with well-developed markets.…”

Section: Introductionmentioning

confidence: 99%

Staged Privatization: Transforming State-Owned Enterprises into Market-Based Firms

Jiang¹,

Wang²

2016

JITE

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Most privatizations around the world, especially in developed economies, are staged processes involving multiple stages of shares lockup and unlocking in the stock market.This paper proposes a theory on staged or step-by-step privatization. We show that such an approach is efficient, in the sense that it can successfully transform state-owned enterprises into efficient market-based firms. Our theory explains the popularity of staged privatizations around the world. We have also conducted empirical analysis, yielding supporting evidence for our theory.

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Share issuing privatizations in China: Sequencing and its effects on public share allocation and underpricing

Cited by 25 publications

References 27 publications

Political Selection of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data

Political Selection of Firms Into Privatization Programs. Evidence From Romanian Comprehensive Data

Expropriation of Minority Investors in Chinese Listed Firms: The Role of Internal and External Corporate Governance Mechanisms

Staged Privatization: Transforming State-Owned Enterprises into Market-Based Firms

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