A regional perspective on the privatisation of Chinese state-owned firms

This study examines the impact of regional formal and informal institutions and the regional origins of private shareholders on the privatisation efficiency of Chinese state-owned enterprises (SOEs). Using a difference-in-differences method to examine 63,599 firm–year observations, we find that, on average, privatisation enhances the capacity utilisation efficiency of Chinese SOEs. That positive effect is stronger in regions with higher marketisation or more embedded in Confucianism. Interestingly, private shareholders from mainland China enhance capacity utilisation, but foreign shareholders exert no significant effect. Moreover, Hong Kong–Macau–Taiwan shareholders <i>weaken</i> the positive effect of privatisation on capacity utilisation in both low-marketised and high-Confucian regions.