Does Consideration Matter to China’s Split Share Structure Reform?
University of New South Wales (UNSW) - School of Accounting
affiliation not provided to SSRN
Robert M. J. Czernkowski
University of Technology, Sydney (UTS); Financial Research Network (FIRN)
Accounting & Finance, Vol. 52, Issue 2, pp. 439-466, 2012
We investigate the share market response to China’s split share structure reform and find average negative daily return around the government announcement on 29 April 2005. However, there is a turnaround at individual companies’ decision to implement the reform where we find positive and significant average daily return, contingent on the type of consideration. We attribute this change in market sentiment to the company’s announcement that the reform will involve the payment of consideration to holders of tradable A‐shares. Our results also show that holders of tradable A‐shares earn significant abnormal daily returns when companies propose to pay in cash or warrants or combine any of these payment methods with bonus shares.
Number of Pages in PDF File: 28
Keywords: China reform, A‐shares, Minority interests, Split share structure
JEL Classification: G14, G38, O16Accepted Paper Series
Date posted: April 21, 2012
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