Does transfer of control rights and private benefits of control increase efficiency? Evidence from China’s privatization of the SOE’s

Shulin Wang, Mahfuzul Haque and Steven Lamb

Journal of Chinese Economic and Business Studies, 2016, vol. 14, issue 4, 329-346

Abstract: This study assesses China’s overall privatization efficiency from the perspective of private benefits of control. Results suggest that there is no statistically significant change in the firm’s performance after the transfer. However, ROE is negatively correlated with the magnitude of block premiums at the point of purchase. The research also finds that the average private benefit of a private controlling shareholder is significantly higher than that of a state-controlling shareholder. Obtaining private benefits of control is often the private buyers’ main acquisition motive. However, private benefit undermines the future corporate performance; therefore, lowering the private benefits may help improve the efficiency of privatization. As of now, privatization by means of controlling right transfer among listed companies is inefficient in China.

Date: 2016
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DOI: 10.1080/14765284.2016.1175766

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