%0 Report
        %A (Mavis), Christos Mavrovitis
%A Pal, Sarmistha
        %T Can Politics Tame the Market? Market Responses to Government Control of Fully and Partially Privatized Firms in China
        %D 2025
        %8 2025 Jul
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17985
        %U https://www.iza.org/index.php/publications/dp17985
        %X 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.
        %K local government incentives
%K authoritarian central government
%K firm value maximization
%K full and partial privatization
%K non-tradable shares reform
%K difference-in-differences