State shareholding and the value of Chinese firms

Tian, G (2000) State shareholding and the value of Chinese firms. Working Paper. London Business School IFA Working Paper.

Abstract

Examining the ultimate ownership and control of 826 corporations listed on China's stock market, this paper argues that the government shareholder in control is the main feature of these Chinese firms. With the panel dataset of five years, it was found that firms under the control of the government shareholder are valued lower than the comparable firms under the control of a nongovernment shareholder, but the continuos relationship between state shareholding and corporate value is nonmonotonic. Corporate value is lower with a larger stake of government ownership when the government is a small shareholder, but it increases with increased state shareholding when the government is a large shareholder. The paper interprets it with the grabbing and helping hands of the government shareholder.