Post-Privatization Ownership Dynamics: Evidence from Chinese Share Issuing Privatizations

摘要

This paper studies the determinants of post-privatization ownership dynamics in 430 Chinese state-owned enterprises that experienced a share issuing privatization (SIP) during 1994–2002. For this purpose, we first build a probit model to investigate the driving forces behind a further decrease in state ownership in the first five listing years. Thereafter, we explore the nature of this decrease, by differentiating between the issuance decision, where state ownership dilutes as a result of new public share offerings, and the divestment decision, where the government actually sells some of its own shares to another non-state-owned institution. We find that betterperforming SOEs are more likely to issue new shares to the general public, but a more direct link with firm growth opportunities is lacking. Yet, the issuance decision is timed when market conditions are favorable. Furthermore, firms incurring more underpricing at SIP tend to issue more public shares after SIP, which is consistent with the signaling hypothesis from the IPO literature. Regarding the divestment decision, we find that the Chinese state is more likely to sell its shares in the smaller, bad-performing and highly levered firms, but we find no evidence that variables apturing the benefits and costs of external monitoring play a role in ownership dynamics after partial privatization.