The Split-Share-Structure Reform in China: Past, Procedure, and Impact

Zheng Yang, Wenxuan Hou and Xiaolin Qian

Chapter Chapter Seven in Sustainable Entrepreneurship in China, 2015, pp 159-177 from Palgrave Macmillan

Abstract: Abstract This study aims to introduce and investigate the different aspects and influences of the split-share-structure reform (SSSR) of China’s stock market so as to draw a complete picture of this important event in contemporary China, the largest transition economy in the world. Before the SSSR in 2005, there were two types of shares, namely tradable shares and non-tradable shares, which were a unique characteristic of Chinas stock markets. Tradable and non-tradable shares had different holding costs and were distinguishable by whether they can be traded, but both types had the same dividend rights and voting rights. The split-share-structure (SSS) existed during the transition of China’s economy from a regulation-oriented economy into a market-oriented economy.The government gained financing through the privatization of state-owned enterprises (SOEs) but aimed to maintain controlling rights over SOEs by introducing non-tradable shares. However, this approach caused problems for listed SOEs in terms of the evaluation of firm value, liquidity, agency problems, and other issues, which impeded the development of China’s stock market to some extent. Under SSS, non-tradable shares accounted for more than two-thirds of the stock market, and the holders of such shares were insensitive to fluctuations in stock prices, which resulted in disparate interests between shareholders of non-tradable and tradable shares, resulting in tenuous corporate governance structures and poor corporate performance.

Keywords: Business Ethic; Stock Market; Corporate Governance; Earning Management; Tradable Share (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (3)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:pal:palchp:978-1-137-41253-9_7

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137412539

DOI: 10.1057/9781137412539_7

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().