Working Paper: CEPR ID: DP4919
Authors: Saul Estrin; Lihui Tian
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
JEL Codes: G15; G32; G34; L33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government shareholding (G38) | corporate value (G30) |
| government shareholding (up to 30-40%) (L32) | corporate value (G30) |
| government shareholding (beyond 30-40%) (L32) | corporate value (G30) |
| ownership concentration (G32) | corporate performance (G38) |
| dispersed ownership structures (G34) | corporate performance (G38) |