The impact of large public sales of Government assets: empirical evidence from the Chinese stock markets on a gradual and offer-to-get approach

The impact of large public sales of Government assets: empirical evidence from the Chinese stock... In June 2001, the Chinese Government announced proposals to reduce its retained ownership in listed Chinese state-owned enterprises. In the 3 months following the announcement, the market fell by 40 % and as a consequence, in 2002 the programme was cancelled. The Government learnt lessons and in April 2005 it launched a revised plan to sell its shares, known as the Full Circulation Reform. The new reform was carefully guided by official document releases, trialled with a pilot programme, and then extended to the majority of firms in groups over a 2-year period. The process was known as a gradual, offer-to-get approach. At the firm-level, each reforming company gradually implemented the sale of its Government-held shares through one negotiation stage and one voting stage. Part of the negotiation stage centred on the compensation that would be paid by the Government to the public shareholders to ensure that the reforms went through. This paper investigates market reactions around the critical event dates in the reform process and the underlying dynamics. The results show that this reform had positive impact on prices, indicating the gradual and offer-to-get approach was very successful and Government objectives for the sale were met. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

The impact of large public sales of Government assets: empirical evidence from the Chinese stock markets on a gradual and offer-to-get approach

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Publisher
Springer US
Copyright
Copyright © 2014 by Springer Science+Business Media New York
Subject
Economics / Management Science; Finance/Investment/Banking; Accounting/Auditing; Econometrics; Operations Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-014-0433-9
Publisher site
See Article on Publisher Site

Abstract

In June 2001, the Chinese Government announced proposals to reduce its retained ownership in listed Chinese state-owned enterprises. In the 3 months following the announcement, the market fell by 40 % and as a consequence, in 2002 the programme was cancelled. The Government learnt lessons and in April 2005 it launched a revised plan to sell its shares, known as the Full Circulation Reform. The new reform was carefully guided by official document releases, trialled with a pilot programme, and then extended to the majority of firms in groups over a 2-year period. The process was known as a gradual, offer-to-get approach. At the firm-level, each reforming company gradually implemented the sale of its Government-held shares through one negotiation stage and one voting stage. Part of the negotiation stage centred on the compensation that would be paid by the Government to the public shareholders to ensure that the reforms went through. This paper investigates market reactions around the critical event dates in the reform process and the underlying dynamics. The results show that this reform had positive impact on prices, indicating the gradual and offer-to-get approach was very successful and Government objectives for the sale were met.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Jan 31, 2014

References

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    Aktas, N; Bodt, E; Cousin, JG
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    Bai, CE; Liu, QJ; Lua, J; Song, FM; Zhang, JX
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    Binder, JJ
  • Venture capital and IPO lockup expiration: an empirical analysis
    Bradley, D; Jordan, B; Yi, H; Roten, I
  • The role of lockups in initial public offerings
    Brav, A; Gompers, P
  • Investor protection, adverse selection, and the probability of informed trading
    Brockman, P; Chung, DY
  • Measuring security price performance
    Brown, S; Warner, J
  • Profiting from Government stakes in a command economy: evidence from Chinese asset sales
    Calomiris, CW; Fisman, R; Wang, YX
  • The performance and long-run characteristics of the Chinese IPO market
    Chi, J; Padgett, C
  • Business ties and proxy voting by mutual funds
    Davis, GF; Kim, EH

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