Block Trade Targets in China

44 Pages Posted: 28 Aug 2012 Last revised: 21 Feb 2013

See all articles by Liping Dong

Liping Dong

Kyushu University

Konari Uchida

Kyushu University

Xiaohong Hou

China University of Mining and Technology (CUMT)

Date Written: February 20, 2013

Abstract

We examine characteristics associated with the probability of Chinese companies being block trade targets. We find that the probability decreases once a company has completed its split-share structure reform, and thereby, substantially decreases non-publicly tradable shares. Accordingly, block trade costs increased significantly after the reform. Firms with less concentrated (well-balanced) ownership structures are more likely to be block trade targets, and bidders pay low costs to obtain control rights of those companies. Finally, bidders tend to target small companies with low directors’ ownership. In China, bidders are likely to target companies that provide new controlling shareholders a low-cost opportunity to extract private benefits.

Keywords: private benefits of control, block trade, split-share structure reform, ownership concentration, China

JEL Classification: G34, G38

Suggested Citation

Dong, Liping and Uchida, Konari and Hou, Xiaohong, Block Trade Targets in China (February 20, 2013). 25th Australasian Finance and Banking Conference 2012; Midwest Finance Association 2013 Annual Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2136761 or http://dx.doi.org/10.2139/ssrn.2136761

Liping Dong

Kyushu University ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

Konari Uchida (Contact Author)

Kyushu University ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan
+81-92-642-2463 (Phone)

Xiaohong Hou

China University of Mining and Technology (CUMT) ( email )

Xuzhou, Jiangsu
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
71
Abstract Views
849
rank
342,496
PlumX Metrics