Privatisation, State Ownership and Productivity: Evidence from China

Abstract

This paper examines the relationship between the transfer of ownership between the public and private sectors of Chinese industry, and its impacts on performance. We link ownership changes to productivity growth, and demonstrate that privatisation contributes significantly. We offer an extension that is generally ignored in the literature, in looking at firms that are taken back into state ownership, and evaluating the productivity growth effects of this. Further, we highlight the well-understood simultaneity problems, and demonstrate the hazard of ignoring the issue by comparing various estimators, including the modified control function approach. In general, the results stress the importance of allowing for such endogeneity when evaluating the productivity effects of ownership change.China, Ownership Change, Productivity,

Privatization, market competition, international attractiveness, management tenure and hotel performance: Evidence from Slovenia

“…The impact of privatization on firm performance has received increasing attention in transition and developed countries, though the consequences of privatization, especially within developing countries remain controversial (Bevan et al, 1999;Benfratello and Sembenelli, 2006;Earle and Telegdy, 2002;Djankov and Murrell, 2002;Forsyth, 2002;Driffield and Du, 2007;Estrin et al, 2009;Assaf, 2009). Generally, several theoretical arguments support the fact that privatization is linked to higher labor productivity and higher utilization of the available capital stock.…”

Ownership structure, monitoring, and market value of companies: evidence from an unusual privatization mode

“…It should be noted that, as we investigate cross-sectional differences among firms undergoing ownership change (rather than those between privatized and state-owned companies), the potential endogeneity of privatization decisions does not bias our results: even if companies with certain common characteristics were more likely to be transferred than others, this common factor should not generate differences in cross-sectional price reactions to transfer announcements (Driffield and Du 2007).…”

“…Hence, privatization may improve corporate performance by introducing new mechanisms of monitoring and control: stock market valuation of managerial decisions, different legal framework, actions of analysts and shareholders, the market for corporate control, and the managerial labour market. 4 Empirical studies show that privatization improves firms' performance and value, but the results vary and depend on the type of private owner, privatization mode, as well as the legal and macroeconomic framework (Djankov and Murrell 2002;Driffield and Du 2007;Estrin et al 2007;Konings, Van Cayseele, and Warzynski 2005;Megginson and Netter 2001). Despite potential benefits, governments around the world are reluctant to conduct full privatizations and retain shares in partially privatized companies (Bortolotti and Faccio 2004).…”

Regional and sectoral differences in the spatial restructuring of Chinese manufacturing industries during the post-WTO period

“…Two dummies are included to control the large and medium enterprises (LARGE and MED-IUM). Different ownerships of industrial enterprises may also differ in productivity (Bai et al 2009;Driffield and Du 2007). We introduce four dummies to control state-owned or controlled (SOES), collectively owned (COES), privately owned (PRIV) and enterprises based in Hong Kong, Macao and Taiwan (HMT).…”

“…Cities with more employment in non state-owned enterprises suggest more economic liberalization and more competition. Industrial enterprises need to be more productive to survive in more economically liberalized cities (Driffield and Du 2007).…”