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Foreign shareholding, corporate governance and firm performance: Evidence from Chinese companies

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  • Tsafack, Georges
  • Guo, Lin

Abstract

This paper examines how a firm’s corporate governance characteristics and institutional environment affect the presence of large foreign shareholding, and how a firm’s foreign ownership influences its performance. For a sample of listed Chinese companies, we find that both firm-level governance characteristics and country-level institutional environment affect the presence and the extent of large foreign shareholding. We also find an inverted U-shaped relation between a firm’s foreign ownership and its return on assets, return on equity and Tobin’s q. The implied optimal foreign ownership increases when changes in institutional environment reduce the opportunity for controlling shareholders to extract private benefits.

Suggested Citation

  • Tsafack, Georges & Guo, Lin, 2021. "Foreign shareholding, corporate governance and firm performance: Evidence from Chinese companies," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000605
    DOI: 10.1016/j.jbef.2021.100516
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    2. Pompei Mititean, 2022. "The Impact Of Corporate Governance Characteristics On Companies’ Financial Performance: Evidence From Romania," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 113-134, April – J.

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    More about this item

    Keywords

    Chinese market; Foreign investor; Firm performance; Corporate governance;
    All these keywords.

    JEL classification:

    • F39 - International Economics - - International Finance - - - Other
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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