B-share discount puzzle in China: a revisit of dual-share firms

Donald Lien and Chun-Da Chen ()
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Donald Lien: University of Texas at San Antonio
Chun-Da Chen: Lamar University

Review of Managerial Science, 2020, vol. 14, issue 5, No 5, 1047-1075

Abstract: Abstract This paper revisits the B-shares discount puzzle for dual-class shares in China. The major finding shows that the Shanghai stock market experiences a greater downward correction in stock prices and the discount rate of B-shares diminishes after the B-shares’ opening, but, in the long run the price discounts of B-shares persist. The stock returns of dual-class firms in both Shanghai and Shenzhen B-share markets have negative abnormal returns during the opening event, and then reverse into positive ones markedly in the long run. The investors’ trading activities are sensitive to the number of board members and state-ownership structures. In addition, the return spillover from the sample B-share to the A-share index obviously accelerates and the impact persistence is shortened.

Keywords: Investment deregulation; Chinese stock market; Dual-share firm; Price discount; 62G08; 62H12; 62J02 (search for similar items in EconPapers)
JEL-codes: C22 G10 G14 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11846-018-0324-x

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