Has the Split-Share Reform Influenced Corporate Behaviour? Chinese Firms’ Fixed Capital Investment 2002–2016

38 Pages Posted: 24 Jul 2019

See all articles by Min Shi

Min Shi

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management

Dayong Zhang

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management

David Dickinson

University of Birmingham - Department of Economics

Date Written: July 22, 2019

Abstract

In 2005, China took an important step in its privatisation process by initiating the Split Share Reform, whereby state-owned shares became tradeable. As a consequence, there was a significant rise in private holdings of shares of listed companies which previously had high state ownership. This paper considers the impact of this change, by examining how the SSR impacted on firms’ capital investment. Using a value-maximising approach, we empirically model Chinese firms’ fixed capital investment recognising that this was a period of global instability caused by the Global Financial Crisis. Controlling for its effects, we are able to consider if and how the reform influenced firms’ behaviour.

Keywords: Firm Investment; Value Maximisation; Global Financial Crisis; China’s Shareholding Structure Reform

JEL Classification: G01; G30; G31; G32

Suggested Citation

Shi, Min and Zhang, Dayong and Dickinson, David, Has the Split-Share Reform Influenced Corporate Behaviour? Chinese Firms’ Fixed Capital Investment 2002–2016 (July 22, 2019). 3rd Chapman Conference on Money and Finance - Financial Market Development in Emerging Asia: Impact on Corporate Performance, Capital Flows and Politics | May 4, 2018, Available at SSRN: https://ssrn.com/abstract=3424375 or http://dx.doi.org/10.2139/ssrn.3424375

Min Shi

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

Dayong Zhang

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

David Dickinson (Contact Author)

University of Birmingham - Department of Economics ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

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