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Mitigating firm-level political risk in China: The role of multiple large shareholders

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  • Wang, Liang

Abstract

We adopt text-based tools to construct a new measurement of the firm-level political risk (FPR) faced by individual Chinese listed firms: the share of management discussion and analysis (MD&A) they have allocated to political risks. We investigate the effect of multiple large shareholders (MLS) on FPR and find that MLS exert a negative effect on FPR. These results hold after addressing endogeneity. We therefore link MLS to FPR, providing insights into mitigating firms’ political risk in China by capturing the wide variation in actual and perceived political risk across firms and over time.

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  • Wang, Liang, 2023. "Mitigating firm-level political risk in China: The role of multiple large shareholders," Economics Letters, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004347
    DOI: 10.1016/j.econlet.2022.110960
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    More about this item

    Keywords

    Firm-level political risk; Chinese listed firms; Multiple large shareholders; Ownership structure; Textual analysis; Management discussion and analysis;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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