Hayek argues that local knowledge is a key for understanding whether production should be decentralized. This paper tests Hayek?s predictions by examining the causes of the Chinese government?s decision to decentralize state-owned enterprises. Since the government located closer to a state-owned...

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther,...

The serious implications of privatizing state-owned enterprises for politicians, managers, and investors make such decisions highly contingent on firm characteristics and past performance, complicating the identification of the privatization effects. A unique opportunity for this identification...

Hayek (1945) argues that local information is a key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther,...

We document the reversal of privatization in China—local governments re-possessing ownership stakes in a quarter of previously privatized firms from 1998–2007. Privatized firms are ‘renationalized' to ease the burden of unemployment in local labor markets. Firms located in provinces with a...

We investigate the power structure of the Chinese political system and its implications on corporate sectors. We document large-scale ‘re-nationalization' — local government re-possessing controlling ownership stakes in previously privatized firms during the period 1999-2007. Firms located...

We document large-scale reversal of privatization in China — local governments taking back shares in a quarter of previously privatized firms. Politicians who are not affiliated with any of the dominant political factions are more likely to waver under pressure and adopt renationalization...

We document reversals of privatization in China—local governments re-possessing ownership stakes in a quarter of previously privatized firms during 1998–2007, a period when the privatization process was still ongoing. This type of ownership restructuring helped ease the unemployment burden...

The serious implications of privatizing state-owned enterprises for politicians, managers, and investors make such decisions highly contingent on firm characteristics and past performance, complicating the identification of the privatization effects. A unique opportunity for this identification...