Decisions Made by the Controlling Shareholder Under Financial Crisis

Huajie Liang and Renzeng Wang

Emerging Markets Finance and Trade, 2017, vol. 53, issue 6, 1405-1424

Abstract: We employ a sample of 12,200 observations from 2,321 companies listed on the Shanghai and Shenzhen Stock Exchanges in China between 2005 and 2013 to test five hypotheses. The empirical results show that the cost of tunneling and ownership structure play important roles in restraining incentives to expropriate firms. Financial crisis will reinforce the incentive to propping rather than tunneling with higher ownership concentration. Moreover, controlling shareholders of state-owned enterprises show a stronger motivation to prop up during crisis periods than do those of non-state-owned enterprises. The results indicate that both an entrenchment effect and a convergence-of-interest effect actually exist and vary according to ownership structure and macroeconomic circumstances.

Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2017.1321538 (text/html)
Access to full text is restricted to subscribers.

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:mes:emfitr:v:53:y:2017:i:6:p:1405-1424

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2017.1321538

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().