The impact of state ownership on share price informativeness: The case of the Split Share Structure Reform in China
The impact of state ownership on share price informativeness: The case of the Split Share Structure Reform in China
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.
state ownership, share price informativeness, split share structure reform, china
248-261
Hou, Wenxuan
eb0d410d-b603-47bf-ab14-e8d26389b007
Kuo, Jing-Ming
4ded9336-66d1-4a13-bc34-5473e6532eb6
Lee, Edward
1187554c-590e-458c-92f1-05bd7757e768
December 2012
Hou, Wenxuan
eb0d410d-b603-47bf-ab14-e8d26389b007
Kuo, Jing-Ming
4ded9336-66d1-4a13-bc34-5473e6532eb6
Lee, Edward
1187554c-590e-458c-92f1-05bd7757e768
Hou, Wenxuan, Kuo, Jing-Ming and Lee, Edward
(2012)
The impact of state ownership on share price informativeness: The case of the Split Share Structure Reform in China.
British Accounting Review, 44 (4), .
(doi:10.1016/j.bar.2012.09.003).
Abstract
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.
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Published date: December 2012
Keywords:
state ownership, share price informativeness, split share structure reform, china
Organisations:
Centre for Digital, Interactive & Data Driven Marketing
Identifiers
Local EPrints ID: 357060
URI: http://eprints.soton.ac.uk/id/eprint/357060
ISSN: 0890-8389
PURE UUID: a70bd580-2d3f-49b4-87fc-249eb2a1c27e
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Date deposited: 25 Sep 2013 09:30
Last modified: 14 Mar 2024 14:54
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Author:
Wenxuan Hou
Author:
Jing-Ming Kuo
Author:
Edward Lee
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