Non-credible privatization

This paper analyzes government incentives in privatization and shows that governments' cheap talk results in non-credible policy. Ex-post, only bad firms will take a sequential strategy in privatization, which will reveal its type and lead to a price drop. These results are used to analyse China's share issue privatization plan and market reaction to it.

Isometric immersions of RCD(K,N)(K,N) spaces via heat kernels

For an RCD$(K,N)$ space $(\mathsf{X},\mathsf{d},\mathfrak{m})$, one can use its heat kernel $\rho$ to map it into $L^2(\mathfrak{m})$ by a locally Lipschitz map $\Phi_t(x):=\rho(x,\cdot,t)$. An RCD$(K,N)$ space is said to be an isometric heat kernel immersing space, if its associated $\Phi_t$ is an isometric immersion multiplied by a constant depending on $t$ for any $t>0$. We prove that any compact isometric heat kernel immersing RCD$(K,N)$ space is isomorphic to an unweighted closed smooth Riemannian manifold. More generally, it is proved that any non-collapsed RCD$(K,N)$ space with an isometrically immersing eigenmap is also isomorphic to an unweighted closed smooth Riemannian manifold. As an application, we give some diffeomorphic finiteness theorems for a certain class of Riemannian manifolds with a curvature-dimension-diameter bound and an almost isometrically immersing eigenmap.Comment: A main theorem is improved to the smooth convergence resul

Finance, investment and monetary policy

Available from British Library Document Supply Centre- DSC:DN063426 / BLDSC - British Library Document Supply CentreSIGLEGBUnited Kingdo

Ultimate privatization and change in firm performance: Evidence from China

We extend the current empirical literature on privatization by exploring the effect of ultimate privatization on the performance of Chinese listed companies. Ultimate privatization is defined as the incidence of transferring the ultimate control of a state-owned company from the government to private owners. Using a sample of 127 Chinese listed companies that have had controlling blocks transferred from the government to private owners, we show that firm performance improved significantly following this transfer. In addition, gains in profitability and efficiency are more prominent when the new controlling shareholder is an "outsider", one who does not own shares in the company prior to the transfer of control. Our results suggest that the Chinese government should continue to reduce its controlling ownership in listed companies, as the transfer of control to private owners enhances operating efficiency and profitability.Ultimate privatization Control transfer State-owned enterprises Insider Outsider

Marketability, control, and the pricing of block shares

Unlike in other countries, negotiated block shares have huge discounts in China. We argue that trading restrictions help to explain this puzzle. Block shares in China face trading restrictions in the open market and can only be traded in the form of block transfers at negotiated prices. Using a dataset of 233 block transfers in China between 2002 and 2003, we find that discounts on block share prices increase with the proportion of restricted shares in the ownership. The likelihood of private benefit of control has positive impact on block prices, but the effect diminishes when there are other large shareholders. Furthermore, private institutions offer a higher price than state-owned institutions.G30 G12 Trading restrictions Block shares Private benefit of control

How Do Firms Finance Large Cash Flow Requirements?

How do firms finance large cash flow requirements? We examine this in the context of firms that are subject to substantial cash flow requirements. We find that trade credit, inventory and cash stock reductions are all important in the short term for mild requirements. Larger and longer cash flow shortages give rise to more equity than debt finance. After the shocks, firms gradually adjust their leverage back to pre-shock levels by retiring debt and issuing equity. Financing patterns during a shock are consistent with a pecking-order theory of finance, whereas the adjustment afterwards is consistent with a trade-off theory