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We document evidence of corruption in Chinese state asset sales. These sales
involved stakes in partially privatized firms, providing a benchmark—the price of
publicly traded shares—to measure underpricing. Underpricing is correlated
with deal attributes associated with misgovernance and corruption. Sales by
“disguised” owners that misrepresent their state ownership to elude regulatory
scrutiny are discounted 5–7 percentage points more than sales by other owners;
related party transactions are similarly discounted. Analysis of subsequent
operating performance provides suggestive evidence that aggregate ownership
transfers improve profitability, though not in cases where the transfers
themselves were corrupted
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Kembali