Change of control and the success of China's share-issue privatization

Using two newly available datasets of exchange-listed firms in China covering the period from 1994 to 2003, we test if share-issue privatization, defined here as a change of corporate control from the State to private owners rather than the IPO event used in earlier studies, improved firm performance. Our econometric analysis shows that privatization, when accompanied by a change of control, has had positive effects on profitability and the productivity of labor that are both statistically and economically significant.