Ultimate ownership, crash risk, and split share structure reform in China

Quanxi Liang, Donghui Li and Wenlian Gao

Journal of Banking & Finance, 2020, vol. 113, issue C

Abstract: This study investigates the relationship between ultimate ownership and stock price crash risk for Chinese firms and the impact on this relationship of the implementation of the split share structure reform, which rendered previously non-tradable shares freely tradable. We find that government-controlled firms, especially local ones, have a significantly higher crash risk than privately controlled firms. After the reform, crash risk of all firms decreases significantly, with a greater risk reduction for privately controlled firms than for government-controlled firms. Further evidence demonstrates that government-controlled firms with stronger political incentives tend to have higher crash risk.

Keywords: Crash risk; Government control; Split share structure reform; Political connections (search for similar items in EconPapers)
JEL-codes: F23 F30 G15 G32 O32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:113:y:2020:i:c:s0378426620300182

DOI: 10.1016/j.jbankfin.2020.105751

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