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Will China's split share structure reform mitigate agency problems?

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  • Tzu-Yun Tseng

Abstract

China's unique split share structure has rendered its capital market more imperfect and agency problems more severe than those in other emerging markets. Since 2005, China has invested tremendous efforts to facilitate its split share structure reform (SSSR), undoubtedly the most influential institutional change in the development of China's stock market. Hence, the SSSR provides us with a valuable opportunity to examine whether the agency problems of listed firms in China have been mitigated via the implementation of SSSR. The sample is drawn from the firms listed on the Shenzhen and Shanghai Stock Exchanges that had completed the SSSR processes prior to the end of 2005. Covering the period from 2002 to 2008, the study finds that the SSSR does play a positive role in alleviating the agency problems of listed firms in China.

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  • Tzu-Yun Tseng, 2012. "Will China's split share structure reform mitigate agency problems?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(2), pages 193-207, February.
    • Handle: RePEc:taf:jocebs:v:10:y:2012:i:2:p:193-207
    DOI: 10.1080/14765284.2012.673781
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    Cited by:

    1. He, Wei & Mukherjee, Tarun K. & Kent Baker, H., 2017. "The effect of the split share structure reform on working capital management of Chinese companies," Global Finance Journal, Elsevier, vol. 33(C), pages 27-37.
    2. Farman Ullah Khan & Junrui Zhang & Muhammad Usman & Alina Badulescu & Muhammad Safdar Sial, 2019. "Ownership Reduction in State-Owned Enterprises and Corporate Social Responsibility: Perspective from Secondary Privatization in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    3. He, Wei & Kyaw, NyoNyo A., 2018. "Capital structure adjustment behaviors of Chinese listed companies: Evidence from the Split Share Structure Reform in China," Global Finance Journal, Elsevier, vol. 36(C), pages 14-22.
    4. Yu, Mei & Ashton, John K., 2015. "Board leadership structure for Chinese public listed companies," China Economic Review, Elsevier, vol. 34(C), pages 236-248.
    5. Liang Guo & Ya Dai & Donald Lien, 2016. "The effects of China’s split-share reform on firms’ capital structure choice," Applied Economics, Taylor & Francis Journals, vol. 48(27), pages 2530-2549, June.
    6. Ma, Ming & Sun, Xian & Waisman, Maya & Zhu, Yun, 2016. "State ownership and market liberalization: Evidence from China's domestic M&A market," Journal of International Money and Finance, Elsevier, vol. 69(C), pages 205-223.

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