Date of Award


Degree Type


Degree Name


Degree Program

Financial Economics


Economics and Finance

Major Professor

Mukherjee, Tarun

Second Advisor

Naka, Atsuyuki

Third Advisor

Wei, Peihwang

Fourth Advisor

Whitney, Gerald

Fifth Advisor

Xiao, Wei


In 1991, the Chinese government started the privatization process. A distinguishing feature of this privatization process is the presence of the government as a major shareholder in the privatized SOEs which creates a unique ownership structure that affects the firm performance, and, in turns its choice of equity issuing method. This dissertation investigates the relation between ownership structure, firm value, and the choice of equity offering method of the Chinese semi-privatized former state-owned enterprises. The dissertation consists of two essays. The first essay examines this relationship during the period 1993-1998 when the Chinese stock exchanges were at the infancy stage. The second essay covers the period 1999-2003 when the Chinese government crafted many laws to modernize their stock exchanges and protect the investor. In the first essay, we find that firms with higher government ownership under-perform relative to those with lower government ownership and prefer issuing rights offerings. The market reaction to the rights offering is lower than that to the public offering. Finally, the long-term market and operating performance of firms issuing rights offerings is poorer than their matched peer group. In the second essay, we find that 1) firms with higher government ownership have still lower performance than firms with lower government ownership; 2) firms with higher government ownership still use rights offerings as equity issue method; 3) firms with the lowest government ownership issue equity using private placements; 4) the market reaction to the announcement of private placements is positive; and 5) the monitoring action provided by the placement buyer has a positive effect on the long-term performance of the firms issuing private placements. Our results are consistent with previous findings about the effects of government ownership on firm value. Privatized firms with high government ownership do not necessarily maximize firm value; instead the managers are more aligned with the political and social agenda of the government. However, firms with low government ownership and high institutional ownership are more profitable. A major contribution of the dissertation is to establish the linkage between ownership, performance, and the choice of equity methods.


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