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Does ownership structure matter? Evidence from firms’ excess cash in China

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  • Zhenzhen Sun
  • Yaping Wang

Abstract

We examine the effect of corporate ownership structure on the market value of excess cash in Chinese listed firms. We find that state ownership has a positive effect, as the market value of excess cash is greater in state-owned firms (SOEs) than in privately controlled firms. Furthermore, we show that expropriation by controlling shareholders is significantly higher in privately controlled firms than in SOEs and increases with excess cash. The evidence is consistent with the view that the market believes private controlling shareholders are more likely to extract the private benefits associated with cash reserves.

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  • Zhenzhen Sun & Yaping Wang, 2016. "Does ownership structure matter? Evidence from firms’ excess cash in China," The European Journal of Finance, Taylor & Francis Journals, vol. 22(4-6), pages 463-483, April.
    • Handle: RePEc:taf:eurjfi:v:22:y:2016:i:4-6:p:463-483
    DOI: 10.1080/1351847X.2012.762409
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    Cited by:

    1. Bi, XiaoGang & Wang, Danni, 2018. "Top-tier financial advisors, expropriation and Chinese mergers & acquisitions," International Review of Financial Analysis, Elsevier, vol. 57(C), pages 157-166.
    2. Yao, Youfu & Hong, Yun, 2023. "Can comment letters impact excess cash holdings? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 900-922.
    3. Tahir Akhtar & Mohammad Ali Tareq & Kashif Rashid, 2023. "The role of shareholders and creditors' rights in affecting cash holdings and firm value: A recent evidence from ASEAN," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 929-961, January.
    4. Chen, Kejing & Jiang, Lin & Kang, Yanling & Yang, Mo & Zhen, Jiahua, 2024. "Blockholder exit threats and excess executive perks," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 80-97.
    5. Zahid Bashir & Ghulam Ali Bhatti & Asad Javed, 2020. "Corporate governance and capital structure as driving force for financial performance: Evidence from non-financial listed companies in Pakistan," Business Review, School of Economics and Social Sciences, IBA Karachi, vol. 15(1), pages 108-133, January-J.
    6. Zijian Cheng & Charles P. Cullinan & Zhangxin (Frank) Liu & Junrui Zhang, 2021. "Cross‐listings and dividend size and stability: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 415-465, March.
    7. Sabeeh Ullah & Yasir Kamal, 2017. "Board Characteristics, Political Connections, and Corporate Cash Holdings: The Role of Firm Size and Political Regime," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(1), pages 157-179, March.

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