Is the Stock Market Just a Side Show? Evidence from a Structural Reform

75 Pages Posted: 19 May 2014

See all articles by Murillo Campello

Murillo Campello

Cornell University - Samuel Curtis Johnson Graduate School of Management; National Bureau of Economic Research (NBER)

Rafael P. Ribas

University of Amsterdam - Finance Group

Yan Albert Wang

Auburn University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2014

Abstract

The 2005 split-share reform in China mandated the conversion of nontradable stocks into tradable status. This paper examines the effects of stock markets on corporate outcomes exploiting multiple institutional features of the Chinese conversion program. Using a generalized propensity score matching approach, we identify increases in corporate profitability, investment, value, and productivity as a result of the reform. We also identify changes in firms' likelihood to issue shares and engage in mergers, as well as changes in dividend and capital structure policies. Our findings provide insights on the role of stock markets in shaping corporate activity and on the impact of regulation on economic growth.

Suggested Citation

Campello, Murillo and Ribas, Rafael Perez and Wang, Yan Albert, Is the Stock Market Just a Side Show? Evidence from a Structural Reform (May 2014). NBER Working Paper No. w20121. Available at SSRN: https://ssrn.com/abstract=2438542

Murillo Campello (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

114 East Avenue
369 Sage Hall
Ithaca, NY 14853
United States

HOME PAGE: http://www.johnson.cornell.edu/Faculty-And-Research/Profile.aspx?id=mnc35

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138

Rafael Perez Ribas

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Room M 3.06
Amsterdam, 1018 TV
Netherlands

HOME PAGE: http://https://sites.google.com/site/r4ribas/

Yan Albert Wang

Auburn University ( email )

315 Lowder Hall
Department of Finance
Auburn, AL 36849
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
12
Abstract Views
330
PlumX Metrics