Profiting from government stakes in a command economy: Evidence from Chinese asset sales

Charles W. Calomiris, Raymond Fisman*, Yongxiang Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

108 Citations (Scopus)


We examine the market response to an unexpected announcement of the sale of government-owned shares in China. In contrast to earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect from the policy's cancellation. We suggest that this results from the absence of a Chinese political transition to accompany economic reforms, so that the benefits of political ties outweigh the efficiency costs of government shareholdings. Companies managed by former government officials have positive abnormal returns, suggesting that personal ties can substitute for government ownership as a source of connections.

Original languageEnglish
Pages (from-to)399-412
Number of pages14
JournalJournal of Financial Economics
Issue number3
Publication statusPublished - 10 Jun 2010
Externally publishedYes


  • Privatization
  • Government ownership
  • Political connections
  • Chinese economy

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