Privatization with Negotiation: Evidence from the Split Share Structure Reform in China
We study share issue privatization in China that took the form of the split share structure reform. Prior to the reform, domestic A-shares are divided into tradable and non-tradable shares with identical cash flow and voting rights. Under the reform, non-tradable share holders negotiate a compensation plan with tradable share holders in order to make their shares tradable. We develop a general equilibrium model to help understand the determinants of compensation and the distribution of gains in the process of privatization. Our model predicts: a) there are underpricing and compensation made by the non-tradable share holders to the tradable share holders if and only if the bargaining power of the former is weaker than the bargaining power of the latter; and b) the size of the compensation is decreasing in the bargaining power of the non-tradable share holders, the fraction of tradable shares, and firm performance, and increasing in firm idiosyncratic risk. Our empirical results using data from the reform are broadly consistent with our models predictions.
bargaining power compensation ratio share issue privatization split share structure reform underpricing
Kai Li Tan Wang Yan-Leung Cheung Ping Jiang
Sauder School of Business University of British Columbia 2053 Main Mall,Vancouver,BC V6T 1Z2 Department of Economics and Finance City University of Hong Kong 83 Tat Chee Avenue,Kowloon,Hong Kon
国际会议
大连
英文
1-55
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）