Notice of RetractionPrivatization, Legal Protections and Pyramid Structure

Notice of Retraction

After careful and considered review of the content of this paper by a duly constituted expert committee, this paper has been found to be in violation of IEEE´s Publication Principles.

We hereby retract the content of this paper. Reasonable effort should be made to remove all past references to this paper.

The presenting author of this paper has the option to appeal this decision by contacting TPII@ieee.org.

Using data of companies listed in Shanghai and Shenzhen Security Exchange, this paper aims at analyzing whether privatization in China influences the extent of listed companies´ pyramid structure, whether investors legal protections affect the relationship between privatization and pyramid structure. I find that after privatization pyramid structure is enlarged, pyramid layers are added to business group and control rights are more significantly in excess of their cash flow rights, legal protection can restrain pyramidal structure enlargement. These findings imply potential costs of privatization: straightforward expropriation of other investors with weak legal protections. It implies that with poor legal protection privatization gives ultimate controller the opportunity to expropriate minor shareholders. So the success of privatization in deloping coutries depend on institutions constructure and improvement in order to provide efficient external governance mechanisms for privatized companies.