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RFS Accepts Associate Professor Guo Yan’s Paper

The paper “China’s Decentralized Privatization and Change of Control Rights”, co-authored by Associate Professor Guo Yan from SEPKU, Professor Gan Jie and Professor Xu Chenggang from Cheung Kong Graduate School of Business, is accepted by the international top academic journal Review of Financial Studies. Based on the process of restructuring the state - owned enterprises of more than 3,000 enterprises in 200 cities in China, the paper discussed how the local government chooses the state - owned enterprise reform methods and the consequences of the different methods to the corporate governance.


Here attaches the abstract of this article:

A distinct feature of China’s privatization is that its design and implementation are decentralized and administered by the local governments. Based on a proprietary survey dataset containing 3,000 firms in over 200 cities, this paper studies how city governments choose among various privatization methods, how these methods transfer control rights, and how they influence privatization outcomes. We find that less political opposition to labor downsizing and greater fiscal capacity prompt cities to choose direct sales to insiders (MBOs) as their privatization method. This method transfers the most control rights to private owners, retains the least government supports and is associated with most hardened budget constraints, restructure most effectively, and achieves the greatest performance improvement. 


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