Corruption in Chinese privatizations

Raymond Fisman*, University of California

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)

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 languageEnglish
Pages (from-to)1-29
Number of pages29
JournalJournal of Law, Economics, and Organization
Volume31
Issue number1
DOIs
Publication statusPublished - Mar 2015
Externally publishedYes

Cite this