Researcher ORCID Identifier

0009-0007-4054-6138

Graduation Year

2026

Date of Submission

12-2025

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Richard Burdekin

Reader 2

Andrew Finley

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2025 Charles J Caiati

Abstract

This thesis investigates how ownership privatization affects firm profitability among Chinese consumer-facing firms, using fixed-effects panel regression on 1,529 publicly listed firms spanning 2015–2024. Contrary to conventional expectations, the results reveal that ownership reform produces heterogeneous effects depending on SOE administrative level. While the average treatment effect on profitability is statistically insignificant, central government-controlled SOEs that underwent privatization experienced statistically significant profitability declines. Local SOEs showed no measurable effect. These findings suggest that central SOEs, historically embedded in state support networks including preferential financing and implicit guarantees, experienced substantial transition costs upon privatization that offset efficiency gains in the short term. The analysis highlights that ownership change alone, without complementary institutional reforms, may be insufficient to improve firm performance and can impose real economic costs on incumbent firms dependent on state support. These findings contribute to debates on the optimal pace and design of market-oriented SOE reforms.

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