Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325043 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17985
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This study examines factors influencing full (FP) versus partial (PP) privatization and how markets respond to government control in PP and FP firms. Exploiting China's 2005 NTS reform as a natural experiment, we find that treated PP firms experienced significantly lower post-reform performance, driven by persistent private benefits of control, failure to adopt value-maximizing behavior, and unchanged liquidity and information asymmetry. In contrast, FP firms eliminated all NTS, maximized value; showed higher stock market liquidity and lower information asymmetry, improved market performance; and gained market confidence in the post-reform period. These findings challenge the effectiveness of China's authoritarian approach to private sector development.
Subjects: 
local government incentives
authoritarian central government
firm value maximization
full and partial privatization
non-tradable shares reform
difference-in-differences
JEL: 
G31
G38
L33
Document Type: 
Working Paper

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