The Nontradable Share Reform in the Chinese Stock Market

Andrea Beltratti and Bernardo Bortolotti

No 12203, Privatisation Regulation Corporate Governance Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: Nontradable shares (NTS) are an unparalleled feature of the ownership structure of Chinese listed companies and represented a major hurdle to domestic financial market development. After some failed attempts, in 2005 the Chinese authorities have launched a structural reform program aiming at eliminating NTS. In this paper, we evaluate the stock price effects of the actual implementation of this reform in 368 firms. The NTS reform generated a statistically significant 8 percent positive abnormal return over the event window, adjusting prices for the compensation requested by tradable shareholders. Results are consistent with the expectation of improved economic fundamentals such as better corporate governance and enhanced liquidity.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 24
Date: 2006
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:feempr:12203

DOI: 10.22004/ag.econ.12203

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