Abstract
We document evidence of corruption in Chinese state asset sales. These sales involved stakes in partially privatized firms, providing a benchmark-the price of publicly traded shares-to measure underpricing. Underpricing is correlated with deal attributes associated with misgovernance and corruption. Sales by "disguised" owners that misrepresent their state ownership to elude regulatory scrutiny are discounted 5-7 percentage points more than sales by other owners; related party transactions are similarly discounted. Analysis of subsequent operating performance provides suggestive evidence that aggregate ownership transfers improve profitability, though not in cases where the transfers themselves were corrupted.
| Original language | English |
|---|---|
| Pages (from-to) | 1-29 |
| Number of pages | 29 |
| Journal | Journal of Law, Economics, and Organization |
| Volume | 31 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Mar 2015 |
| Externally published | Yes |