Review of Quantitative Finance and Accounting

, Volume 45, Issue 1, pp 137–173

The impact of large public sales of Government assets: empirical evidence from the Chinese stock markets on a gradual and offer-to-get approach


    • WH9.37, School of ManagementUniversity of Bath
  • Josie McLaren
    • 4.12Newcastle University Business School
Original Research

DOI: 10.1007/s11156-014-0433-9

Cite this article as:
Zeng, Y. & McLaren, J. Rev Quant Finan Acc (2015) 45: 137. doi:10.1007/s11156-014-0433-9


In June 2001, the Chinese Government announced proposals to reduce its retained ownership in listed Chinese state-owned enterprises. In the 3 months following the announcement, the market fell by 40 % and as a consequence, in 2002 the programme was cancelled. The Government learnt lessons and in April 2005 it launched a revised plan to sell its shares, known as the Full Circulation Reform. The new reform was carefully guided by official document releases, trialled with a pilot programme, and then extended to the majority of firms in groups over a 2-year period. The process was known as a gradual, offer-to-get approach. At the firm-level, each reforming company gradually implemented the sale of its Government-held shares through one negotiation stage and one voting stage. Part of the negotiation stage centred on the compensation that would be paid by the Government to the public shareholders to ensure that the reforms went through. This paper investigates market reactions around the critical event dates in the reform process and the underlying dynamics. The results show that this reform had positive impact on prices, indicating the gradual and offer-to-get approach was very successful and Government objectives for the sale were met.


Chinese state-owned enterprisesSplit-Share Structure ReformGradualismOffer-to-get approachConsideration

JEL Classification


Copyright information

© Springer Science+Business Media New York 2014