Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
권호 표지
DOI QR코드

DOI QR Code

The Effects of Privatization of State-Owned Enterprises on IPO Firms' Initial and Long-term Returns

민영화를 위한 중국 국유기업 신규상장이 투자자의 장단기 주가 수익률에 미치는 영향

  • Kim, Sung-Hwan (School of Business Administration, Kyungpook National University) ;
  • Li, Xin-Yu (School of Business Administration, Kyungpook National University) ;
  • Liu, Yong-Sang (School of Business Administration, Kyungpook National University)
  • Received : 2021.05.30
  • Accepted : 2021.06.23
  • Published : 2021.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

Purpose - The purpose of this study was to examine the effects of privatization of Chinese state-owned enterprises (SOEs) on their initial returns and long-term performance after initial public offering(IPO). Design/methodology/approach - This study used 1,599 Chinese IPO firms, some of which were SOEs. The multivariate regression analyses were implemented to analyze their effects. Findings - First, the privatization of SOEs does not have any statistically significant effect on the initial return of IPO firms. Second, the shareholdings of government prior to IPOs for both privatizing of SOEs and non-privatizing firms and for both exchanges of Shanghai and Shenzhen have a statistically significant positive effect on the initial return of IPO firms. Third, the privatization of SOEs has statistically significant negative effect on the long-term returns of IPO firms. Fourth, the state-shareholdings prior to IPOs have statistically significant negative effects on the long-term return of IPO firms. Fifth, the state-shareholdings of the privatizing SOEs prior to IPOs have statistically significant positive effects on the long-term return of IPO firms. Research implications or Originality - The results imply that the higher shareholdings and ownership of the Chinese government on SOEs reduce the information asymmetry for the investors of IPO shares or maybe due to inefficiency of SOEs prior to IPOs lead to lower offer prices or higher opening prices leading to severe underpricing and relatively lower stock market returns in the long-run both for the privatizing firms and for the higher state-shareholding firms, while both factors interactively improve their long-term stock market returns.

Keywords

References

  1. 김성환, 김진산, 류아기 (2011), "중국 국유기업 민영화가 기업가치에 미치는 영향", 한국산업경영학회 발표논문집, 58-91.
  2. 김현숙 (2006), "우리나라 공기업 민영화가 기업경영성과에 미친 영향에 관한 실증분석", 재정논집, 22(1), 35-60.
  3. 조동근, 이영철 (2006), "중국 상장기업 국유지분율이 기업성과에 미치는 영향에 관한 실증연구-중국 상장제조업을 중심으로", 재정정책논집, 8(1), 83-108.
  4. 주경태, 윤성식 (2006), "공기업 민영화 정책의 효과성에 관한 연구", 행정논총, 44(3), 67-92.
  5. 진빈, 권남훈 (2016), "중국 국유기업의 민영화 요인 및 민영화가 경영성과에 미치는 영향", 동북아경제연구, 28(4), 63-97.
  6. 최승두 (2016), "기간통신사업자 민영화 IPO의 저가발행의 결정요인", 정보통신정책연구, 23(3), 51-73.
  7. 탄진, 김성환 (2018), "중국 국유기업 민영화: 비효율성 전가 vs. 효과적 시장 타이밍", 아태연구, 25(4), 225-253. https://doi.org/10.18107/JAPS.2018.25.4.008
  8. Alchian, A. (1965), "Some Economics of Property Rights", Il Politico, 30, 816-823.
  9. Bai, C. E., J. Y. Lu and Z. G. Tao (2006), "An Empirical Study on the Effects of Ownership Reform in China", Economic Research Journal, 8, 4-13.
  10. Bai, C. E., Z. J. Qian and K. P. Wu (2008), "Determinants of Factor Shares in China's Industrial Sector", Economic Research Journal, 2, 16-28.
  11. Biais, B. and E. Perotti (2002), "Machiavellian Privatization", American Economic Review, 92, 240-258. https://doi.org/10.1257/000282802760015694
  12. Boardman, A. E. and A. R. Vining (1989), "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-owned Enterprises", Journal of Law and Economics, 32(1), 1-33. https://doi.org/10.1086/467167
  13. Brandt, L., J. Roberts and H. Li (2003), Governments, Banks, and Firms: The Case of Privatization in China, Mimeo. Department of Economics, University of Toronto.
  14. Chen, Lin and Yan-Yan Xiong (2004), "From Government to Market: A Literature Review of the Privatization of Foreign State-owned Enterprises", Comparative Economic & Social Systems, 3, 58-64.
  15. Chen, Xiao-Yue and Xiao-Dong Xu (2001), "Ownership Structure, Corporate Performance and Investor Interest Protection", Economic Research Journal, 11, 3-12.
  16. Chowdhry, B. and A. Sherman (1996), "International Differences in Oversubscription and Underpricing of IPOs", Journal of Corporate Finance, 2(4), 359-381. https://doi.org/10.1016/0929-1199(96)00002-8
  17. Dewenter, K. and P. Malatesta (1997), "Public Offerings of State-owned and Privately-owned Enterprises: an International Comparison", Journal of Finance, 52(4), 1659-1679. https://doi.org/10.1111/j.1540-6261.1997.tb01125.x
  18. Dewenter, K. and P. H. Malatesta (2001), "State-owned and Privately-owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity", American Economic Review, 91(1), 320-334. https://doi.org/10.1257/aer.91.1.32
  19. Dong, X. Y., L. Putterman and B. Unel (2006), "Privatization and Firm Performance: A Comparison between Rural and Urban Enterprises in China", Journal of Comparative Economics, 34(3), 608-633. https://doi.org/10.1016/j.jce.2006.06.005
  20. Du, Ying and Li-Guo Liu (2002), "Ownership Structure and Corporate Governance Efficiency: An Empirical Study and Analysis of Chinese Listed Companies", Management World, 11, 124-133.
  21. Galal, A., L. Jones, P. Tandon and I. Vogelsang (1992), Welfare Consequences of Selling Public Enterprises, Washington, D. C.: The Word Bank.
  22. Garnaut, R., L. Song, S. Tenev and Y. Yao (2003), A Study of Firm Restructuring in China, Manuscript. Washington. D. C.: The World Bank.
  23. Guo, K. and Y. Yao (2005), "Causes of Privatization in China: Testing Several Hypotheses", Economics of Transition, 13(2), 211-238. https://doi.org/10.1111/j.1468-0351.2005.00221.x
  24. Gupta, N., J. C. Ham and J. Svejnar (2001), Priorities and Sequencing in Privatization: Theory and Empirical Evidence from the Czech Republic, Working Paper 323, Ann Arbor, Michigan: William Davidson Institute.
  25. Hu, Yi-Fan, Min Song and Jun-Xi Zhang (2006), "Does Privatization Work in China?", Economic Research Journal, 7, 49-60.
  26. Hughes, P. and A. Thakor (1992), "Litigation Risk, Intermediation, and the Underpricing of Initial Public Offerings", Review of Financial Studies, 5(4), 709-742. https://doi.org/10.1093/rfs/5.4.709
  27. Ibbotson, R. (1975). "Price Performance of Common Stock New Issues", Journal of Financial Economics, 2, 235-272. https://doi.org/10.1016/0304-405X(75)90015-X
  28. Jiang, G. H., H. Yue and L. K. Zhao (2009), "A Re-examination of China's Share Issue Privatization", Journal of Banking and Finance, 33(12), 2322-2332. https://doi.org/10.1016/j.jbankfin.2009.06.008
  29. Li, Guang-Zi and Li Liu (2004), "Why Do Governments Dump State Enterprises? Evidence from China", Ito, T. and A. Krueger. (eds.) Governance. Regulation and Privatization, Chicago, IL: University of Chicago Press, 211-230.
  30. Li, Guang-Zi and Li Liu (2010), "Privatization Performance of Listed Companies: A Test Based on Political Views", World Economy, 11, 1-16. https://doi.org/10.1111/j.1467-9701.1988.tb00110.x
  31. Li, H. (2002), "Government's Budget Constraint, Competition, and Privatization: Evidence from China's Rural Industry", Journal of Comparative Economics, 31, 486-502. https://doi.org/10.1016/S0147-5967(03)00070-2
  32. Li, Nan and Zhen Qiao (2010), "An Empirical Analysis of the Effect of State-owned Enterprise Reform Policy-Based on the Estimation of Double Difference Model", The Journal of Quantitative & Technical Economics, 2, 3-21.
  33. Li, S., S. Li and W. Zhang (2000), "The Road to Capitalism: Competition and Institutional Change in China", Journal of Comparative Economics, 28(2), 269-292. https://doi.org/10.1006/jcec.2000.1653
  34. Li, Y. Q. and X. J. Zhang (2008), "A Comparative Study on Corporate Performance of Before & Post-Privatization of Chinese SOEs", NanKai Economic Studies, 4, 97-108.
  35. Liao Qi-Cheng (2019), "The Development Prospects of Private Economy in the New Era", Study Monthly, 6, 30-31.
  36. Liu, Xiao-Xuan (2000), "The Impact of the Structure of China's Industrial Enterprise's Ownership on Its Efficiency", Economic Research Journal, 2, 1-11.
  37. Liu, Xiao-Xuan (2004), "Analysis of the Effect of Privatization Reform on China's Industrial Efficiency-Analysis of Industrial Data from the 2001 National Census", Economic Research Journal, 8, 16-26.
  38. Ljungqvist, A., T. Jenkinson and W. Wilhelm (2003), "Global Integration of Primary Equity Markets: The Role of U.S. Banks and U.S. Investors", Review of Financial, 16(1), 63-99. https://doi.org/10.1093/rfs/16.1.0063
  39. Megginson, W. L. and J. M. Netter (2001), "From State to Market: A Survey of Empirical Studies on Privatization", Journal of Economic Literature, 39(2), 321-389. https://doi.org/10.1257/jel.39.2.321
  40. North, D. (1990), "Institutions, Institutional Change and Economic Performance", Political Economy of Institutions and Decisions, Cambridge, UK: Cambridge University Press, 1-164.
  41. Perotti, E. (1995), "Credible Privatization", American Economic Review, 85, 847-859.
  42. Qi, D., W. Wu and H. Zhang (2000), "Shareholding Structure and Corporate Performance of Partially Privatized Firms: Evidence from Listed Chinese Companies", Pacific Basin Finance Journal, 8(5), 587-610. https://doi.org/10.1016/S0927-538X(00)00013-5
  43. Qian, S. and Wilson H. S. Tong (2001), "China Share Issue Privatization: the Extent of Its Success", Journal of Financial Economics, 70(2), 183-222. https://doi.org/10.1016/S0304-405X(03)00145-4
  44. Ramamurti, R. (1999), "Why Haven't Developing Countries Privatized Deeper and Faster?" World Development, 27(1), 137-155. https://doi.org/10.1016/S0305-750X(98)00131-4
  45. Rock, K. (1986), "Why New Issues are Underpriced?", Journal of Financial Economics, 15, 187-212. https://doi.org/10.1016/0304-405X(86)90054-1
  46. Rousseau, P. L. and X. Sheng (2007), "Change of Control and the Success of China's Share Issue Privatization", China Economic Review, 605-640.
  47. Shan, Di (2004), "Privatization: A Strategic Choice for Economic Adjustment", Economist, 2, 41-246.
  48. Su, J. and G. Jefferson (2003), A Theory of Decentralized Privatization: Evidence from China, Mimeo., Graduate School of International Economics and Finance, Brandeis University.
  49. Sun, Q. and W. H. S. Tong (2003), "China Share Issue Privatization: The Extent of Its Success", Journal of Financial Economics, 70(2), 183-222. https://doi.org/10.1016/S0304-405X(03)00145-4
  50. Tian, Guo-Qiang. and Wei Cui (2004), "Prospects for the Development of China's Private Economy", Studies in International Technology & Economy, 1, 39-43.
  51. Xu, Xiao-Nian (1997), "Establish Corporate Governance Mechanism and Capital Market with Legal Person Institutions as the Mainstay", China Reform, 5, 28-34.
  52. Yang, Yao (1998), "The Influence of Non-state-owned Economic Components on the Technical Efficiency of My Country's Industrial Enterprises", Economic Research Journal, 12, 29-35.
  53. Ye, Di (2012), "Research on the Internationalization Transformation of Chinese Private Enterprises", Science and Technology Management Research, 32(11), 110-113. https://doi.org/10.3969/j.issn.1000-7695.2012.11.024
  54. Yu Ming-Gui, Hui-Jie Zhong and Rui Fan (2019), "Privatization, Financing Constraints and Enterprise Innovation: Evidence from Chinese Industrial Enterprises", Journal of Finance, 4, 75-91.
  55. Yu, M. G., W. G. Li and H. B. Pan (2013), "Privatization, Property Rights Protection and Corporate Risk-Taking", Economic Research Journal, 9, 112-124.
  56. Yu, W. and Y. Zheng (2012), "Can Privatization Improve Firm Performance in China?" Management Review, 24(5), 44-52.
  57. Zhang, A. M., Y. M. Zhang and R. Zhao (2001), "Impact of Ownership and Competition on the Productivity of Chinese Enterprises", Journal of Comparative Economics, 29, 327-346. https://doi.org/10.1006/jcec.2001.1714
  58. Zheng, J. H., X. X. Liu and A. Bigsten (1998), "Ownership Structure and Determinants of Technical Efficiency: An Application of Data Envelopment Analysis to Chinese Enterprises(1986-1990)", Journal of Comparative Economics, 26, 465-484. https://doi.org/10.1006/jcec.1998.1540
  59. Zhou, Kai-Quo and Tao Li (2006), "State-owned Equity, Soft Budget Constraints and Company Value", World Economy, 5, 84-96.