The Impact of State Ownership on Share Price Informativeness: The Case of the Split Share Structure Reform in China
By Wenxuan Hou, Jing‐Ming Kuo, Edward Lee. 2012
119 citations recorded by the source corpus.
This study examines the impact of state ownership on share price informativeness using the unique setting of the Split Share Structure Reform in China. This reform abolishes the trading restriction on shares held mainly by state shareholders. In doing so, it renders state shareholders' wealth more sensitive to share price movements and decreases their conflict of interests with private shareholders. This change is expected to strengthen the corporate governance incentives of state shareholders and reduce the information asymmetry in Chinese listed firms. This prediction is confirmed through empirical evidence of increased share price informativeness among firms that are more sensitive to the impact of this reform, i.e. those with more state ownership or restricted shares. These findings imply that this reform benefits the information environment and minority shareholders in the Chinese stock market.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/d46be65391a18aba02d8031e99c2a01f703c69bd
How researchers see this paper
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In Accounting
- Junhong Yang
- Xiaoqiu Song
- Lutao Ning
- Jing‐Ming Kuo
- A. Guariglia
- Z¨¦lia Serrasqueiro
- Filipe Sardo
- Matthew C. Li
In Finance
- Junhong Yang
- Xiaoqiu Song
- Lutao Ning
- Jing‐Ming Kuo
- A. Guariglia
- Z¨¦lia Serrasqueiro
- Filipe Sardo
- Matthew C. Li
Citations in the corpus
- The Real and Accrual-based Earnings Management Behaviors: Evidence from the Split Share Structure Reform in China (2014, methodology): “Hou, Kuo, and Lee (2012) also indicate that this incentive alignment effect brought by the SSSREF has reduced the incentive for controlling shareholders to withhold price-sensitive information and thus effectively improves corporate transparency.”
- A balancing act: Managing financial constraints and agency costs to minimize investment inefficiency in the Chinese market (2016, background): “Focusing on agency costs, Cumming et al. (2012) and Hou et al. (2012) argue that the 2005 split share structure reform, which allowed restricted shares held mainly by state shareholders to become tradable, and permitted equity-based compensation for executives or directors, enhanced the incentives…”