TY  - RPRT
        AU  - (Mavis), Christos Mavrovitis
AU  - Pal, Sarmistha
        TI  - Can Politics Tame the Market? Market Responses to Government Control of Fully and Partially Privatized Firms in China
        PY  - 2025/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17985
        UR  - https://www.iza.org/index.php/publications/dp17985
        AB  - 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.
        KW  - local government incentives
KW  - authoritarian central government
KW  - firm value maximization
KW  - full and partial privatization
KW  - non-tradable shares reform
KW  - difference-in-differences
        ER  -