Insider privatization with a tail: the screening contract and performance of privatized firms in rural China

The Fundamental Institutions of China's Reforms and Development

“…52 A large percentage of TVEs were privatized since the mid-1990s (James Kai-Sing Kung and Yi-Min Lin 2007;Albert Park and Minggao Shen 2003;Li and Rozelle 2004).…”

Privatization and firm performance: A comparison between rural and urban enterprises in China

“…Garnaut et al (2003) and Ho et al (2003) provide more information on the privatization process for SOEs and for TVEs, respectively. 9 Using the ratio of the up front payment to the value of the shares acquired at the time of privatization as a measure of the completeness of ownership transfer, Li and Rozelle (2004) find that this ratio is positively correlated with labor productivity for privatized TVEs. 10 In the estimation of the factor shares, we use fixed-effects panel data analysis.…”

“…Changes in ideological commitment, shifts in the preference of financial institutions, and increased market competition are identified as some of the chief factors that contributed to massive privatization of TVEs in the late 1990s. Li and Rozelle (2004) estimate the impact of privatization on TVE performance using a sample of 88 privatized TVEs from Jiangsu and Zhejiang for the period from 1994 to 1997 and find a significant positive effect of the reform on labor productivity. With a survey of 45 TVEs in Shandong and Jiangsu in 2000, Ho et al (2003) provide evidence that privatization had increased efficiency by making managers more responsible for the use of enterprise assets and by making firms more profit oriented.…”

Government expropriation and Chinese-style firm diversification

“…Examples include the use of relational contracting instead of formal one in Vietnam where the courts are incompetent (McMillan and Woodruff, 1999), the use of informal trade credit in China where private enterprises face discrimination in accessing formal financing (Brandt and Li, 2003), and the shift toward underground business in face of over-regulation and high taxes in Eastern Europe and Russia (Johnson et al, 1998). Most related to this paper is the literature on the innovations in organizational strategies in China in response to its imperfect and evolving institutional environment, such as township-village enterprises or TVEs (Che and Qian, 1998;Jin and Qian, 1998;Li, 2003;Li and Rozelle, 2004), and political participation of China's private enterprises (Bai et al, 2006;Li et al, 2006).…”