Guanxi, political connections, and expropriation: The dark side of state ownership in Chinese listed companies

摘要: We examine a direct channel through which political connections may affect firm value by analyzing connected transactions between Chinese publicly listed firms and their state-owned enterprise (SOEs) shareholders during 2001-2002. show that, on average, in China are detrimental for minority firms. In addition, state ownership does not appear to protect from worse expropriation private shareholders. find an inverse relationship the percentage of excess returns at announcement transactions. This is driven that majority-controlled state, conducting with controlling SOEs. The median loss these represents 34% transaction, suggesting our results economically significant. SOEs end up significantly off than those non-SOEs. Our suggest shareholdings create conflicts interest public evidence consistent “grabbing hand” model government (Shleifer Vishny, 1998).