 Block trade targets in ChinaLiping Dong, Konari Uchida and Xiaohong Hou Journal of Corporate Finance, 2014, vol. 25, issue C, 188-201 Abstract: We examine characteristics associated with the probability of Chinese companies being block trade targets. We find that the proportion of non-publicly tradable shares over total outstanding shares is positively related to the probability of firms being block trade targets before the split-share structure reform. Ownership concentration, director ownership, and firm size were negatively related to the frequency of firms being block trade targets during the pre-reform period. Pre-reform firms with high free cash flow were likely to be block trade targets, and bidders paid a high premium to acquire those companies. The cost of a block trade increased significantly after the split-share structure reform, and the frequency of block trades declined considerably. These results suggest that before the reform Chinese bidders mainly pursued private benefits of control rather than capital gains from value-increasing takeovers. After the reform, bidders have bought tradable shares and paid a negative premium, suggesting that being a blockholder in Chinese companies implies costs that exceed benefits. Keywords: Private benefits of control; Block trade; Split-share structure reform; Ownership concentration; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:25:y:2014:i:c:p:188-201 DOI: 10.1016/j.jcorpfin.2013.12.001 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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