Capital market liberalization, internal control and corporate diversification: Evidence from China

Zhongze Li, Qinyuan Chen and Yi Zhang

Finance Research Letters, 2025, vol. 71, issue C

Abstract: Using a sample of Chinese listed firms, we examine the effect of capital market liberalization on corporate diversification in the host country. Our findings show that after the opening of the capital market, corporate diversification significantly reduces. Moreover, we show that improving the quality of internal control is an important mechanism for capital market liberalization to reduce corporate diversification. Heterogeneity tests show that the effect of capital market liberalization on corporate diversification is more significant in firms with dual CEOs and low board diligence. Overall, capital market liberalization enhances the corporate governance of firms in a host country.

Keywords: Capital market liberalization; Internal control; Corporate diversification (search for similar items in EconPapers)
JEL-codes: F15 G3 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324014673
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014673

DOI: 10.1016/j.frl.2024.106438

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().