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Corporate Performance of Mixed Enterprises
Author(s) -
Mok Henry M.K.,
Chau Sandy S.M.
Publication year - 2003
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00006
Subject(s) - profitability index , incentive , business , stock (firearms) , finance , government (linguistics) , financial crisis , stock market , financial system , monetary economics , economics , market economy , mechanical engineering , paleontology , linguistics , philosophy , horse , biology , engineering , macroeconomics
We delineate Hong Kong listed corporations into three levels of privatization: the fully privatized blue chips, semi‐privatized red chips and the least privatized H shares. Both H shares and red chips are mixed enterprises that mimic private ownership with joint government and private stock ownership. We find that mixed enterprises are less profitable and lower valued than the fully privatized blue chips, but red chips are more efficient and perform better than blue chips when market confidence swings to their favor. Regression analysis suggests that increased stock ownership by the government and increased emolument incentives are counterproductive to profitability, especially in bad economic times of the 1997–98 Asian financial crisis.