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Ownership Structure and Firm Value in China's Privatized Firms: 1991–2001

Published online by Cambridge University Press:  06 April 2009

Zuobao Wei ,
Feixue Xie  and
Shaorong Zhang
Zuobao Wei
Affiliation:
zwei@utep.edu, Department of Economics and Finance, University of Texas at El Paso, El Paso, TX 79968
Feixue Xie
Affiliation:
fxie@utep.edu, Department of Economics and Finance, University of Texas at El Paso, El Paso, TX 79968
Shaorong Zhang
Affiliation:
zhangs@marshall.edu, Division of Finance and Economics, Marshall University, Huntington, WV 25755.
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Abstract

This paper investigates the relation between ownership structure and firm value across a sample of 5,284 firm years of China's partially privatized former state–owned enterprises (SOE) from 1991–2001. We find that state and institutional shares are significantly negatively related to Tobin's Q, and that significant convex relations exist between Q and state shares, as well as between Q and institutional shares. We also find that foreign ownership is significantly positively related to Tobin's Q. We test for potential endogeneity of ownership, and find that Q and state/foreign ownership are not jointly determined. We also test for time-series, industry, and geo-economic location effects, and find our results to be robust.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 40 , Issue 1 , March 2005 , pp. 87 - 108
Copyright
Copyright © School of Business Administration, University of Washington 2005

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