State Ownership and Earnings Management: Evidence from the Split Share Structure Reform in China

2018 ◽  
Author(s):  
Ja Ryong Kim
Keyword(s):  
Earnings Management ◽  
State Ownership ◽  
Split Share Structure Reform ◽  
Split Share Structure ◽  
Share Structure

scholarly journals Friend or Foe? The Role of State and Mutual Fund Ownership in the Split Share Structure Reform in China

2010 ◽  
Vol 45 (3) ◽  
pp. 685-706 ◽  
Author(s):  
Michael Firth ◽  
Chen Lin ◽  
Hong Zou
Keyword(s):  
Mutual Fund ◽  
State Ownership ◽  
Compensation Ratio ◽  
Compensation Package ◽  
Negative Effect ◽  
Split Share Structure Reform ◽  
Split Share Structure ◽  
Share Structure ◽  
Positive Effect

AbstractThe recent split share structure reform in China involves the nontradable shareholders proposing a compensation package to the tradable shareholders in exchange for the listing rights of their shares. We find that state ownership (the major owners of nontradable shares) has a positive effect on the final compensation ratio. In contrast, mutual fund ownership (the major institutional owner of tradable shares) has a negative effect on the compensation ratio and especially in state-owned firms. The evidence is consistent with our predictions that state shareholders have incentives to complete the reform quickly and exert political pressure on mutual funds to accept the terms without a fight.

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