Friend or foe? The role of state and mutual fund ownership in the split share structure reform in China
Document Type
Journal article
Source Publication
Journal of Financial and Quantitative Analysis
Publication Date
6-1-2010
Volume
45
Issue
3
First Page
685
Last Page
706
Publisher
Cambridge University Press
Abstract
The recent split share structure reform in China involves the nontradable shareholders proposing a compensation package to the tradable shareholders in exchange for the listing rights of their shares. We find that state ownership (the major owners of nontradable shares) has a positive effect on the final compensation ratio. In contrast, mutual fund ownership (the major institutional owner of tradable shares) has a negative effect on the compensation ratio and especially in state-owned firms. The evidence is consistent with our predictions that state shareholders have incentives to complete the reform quickly and exert political pressure on mutual funds to accept the terms without a fight.
DOI
10.1017/S0022109010000190
Print ISSN
00221090
E-ISSN
17566916
Publisher Statement
Copyright © Michael G. Foster School of Business, University of Washington 2010
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Firth, M., Lin, C., & Zou, H. (2010). Friend or foe? The role of state and mutual fund ownership in the split share structure reform in China. Journal of Financial and Quantitative Analysis, 45(3), 685-706. doi: 10.1017/S0022109010000190