Effects of the shareholder base on firm behavior and firm value in China

Kenneth Yung and Yi Jian

International Review of Economics & Finance, 2017, vol. 49, issue C, 370-385

Abstract: Contrary to the evidence based on US firms, we find that a large shareholder base does not benefit firms in China. Our results suggest that a large shareholder base in China implies elevated agency conflicts between individual investors and the controlling shareholders. We find that a larger shareholder base is associated with lower levels of capital expenditures, a lower standard deviation of return on assets, a lower standard deviation of return on equity, and no reduction in dividend payout. Our results imply that insiders increase the expropriation of outsiders as agency conflicts escalate. The shareholder base is associated with a decrease in firm value in China.

Keywords: Shareholder base; Investor recognition; China; State-owned enterprises; Agency problems (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 G35 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:49:y:2017:i:c:p:370-385

DOI: 10.1016/j.iref.2017.03.001

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