Corporate Governance and Firm Value During the Global Financial Crisis: Evidence from China
China University of Mining and Technology (CUMT)
January 12, 2012
International Review of Financial Analysis, Vol. 21, 2012
We find that Chinese state-owned enterprises (SOEs) that performed poorly before the global financial crisis performed better during the crisis, especially when they relied on bank debt. This suggests that state ownership mitigates financial constraints during times of financial crisis. Large shareholders’ ownership has a U-shaped relation to crisis-period performance, which suggests ownership concentration mitigates financial constraints and engenders expropriation problems. We also find that managerial ownership is positively associated with crisis-period performance of SOEs. This result suggests that managerial ownership mitigates expropriation problems in SOEs. Finally, Chinese firms that adopted a reputable accounting auditor experienced a small reduction in firm value during the global financial crisis.
Keywords: Financial crisis, Corporate governance, State-owned enterprises, Managerial ownership, China
JEL Classification: G01, G30, G32, G38Accepted Paper Series
Date posted: October 19, 2010 ; Last revised: August 28, 2012
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