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B-share discount puzzle in China: a revisit of dual-share firms

Author

Listed:
  • Donald Lien

    (University of Texas at San Antonio)

  • Chun-Da Chen

    (Lamar University)

Abstract

This paper revisits the B-shares discount puzzle for dual-class shares in China. The major finding shows that the Shanghai stock market experiences a greater downward correction in stock prices and the discount rate of B-shares diminishes after the B-shares’ opening, but, in the long run the price discounts of B-shares persist. The stock returns of dual-class firms in both Shanghai and Shenzhen B-share markets have negative abnormal returns during the opening event, and then reverse into positive ones markedly in the long run. The investors’ trading activities are sensitive to the number of board members and state-ownership structures. In addition, the return spillover from the sample B-share to the A-share index obviously accelerates and the impact persistence is shortened.

Suggested Citation

  • Donald Lien & Chun-Da Chen, 2020. "B-share discount puzzle in China: a revisit of dual-share firms," Review of Managerial Science, Springer, vol. 14(5), pages 1047-1075, October.
    • Handle: RePEc:spr:rvmgts:v:14:y:2020:i:5:d:10.1007_s11846-018-0324-x
    DOI: 10.1007/s11846-018-0324-x
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    More about this item

    Keywords

    Investment deregulation; Chinese stock market; Dual-share firm; Price discount;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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