Mutual Fund Activism and Market Regulation During the Pre-IFRS Period: The Case of Earnings Informativeness in China from an Ethical Perspective

Shujun Ding (), Chunxin Jia () and Zhenyu Wu ()
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Shujun Ding: University of Ottawa
Chunxin Jia: Peking University
Zhenyu Wu: I.H. Asper School of Business, University of Manitoba

Journal of Business Ethics, 2016, vol. 138, issue 4, No 9, 765-785

Abstract: Abstract This paper investigates the emerging effect of mutual fund involvement on the agency problem between majority and minority shareholders during the pre-IFRS period in China indicated by earnings informativeness from an ethical perspective. We find that the presence of mutual fund hampers earnings informativeness implying that mutual funds in general, at their early stage in China, are not yet capable of serving as an effective monitor. This finding is in sharp contrast to the role of institutional investors in mature markets as documented in the literature. However, mutual funds affiliated with banks have been found to be effective to improve earnings informativeness of Chinese listed companies, and the impact is more pronounced among those affiliated with joint-equity banks compared to their counterparts affiliated with state-owned banks.

Keywords: Corporate transparency; Market regulation; Mutual funds; Monitoring; Ethical perspective (search for similar items in EconPapers)
JEL-codes: G18 G21 G34 M41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10551-015-2797-8

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