Culture and the Historical Persistence of Minority Shareholder Expropriation

54 Pages Posted: 18 Feb 2021 Last revised: 15 Jul 2021

See all articles by Gu Zhihui

Gu Zhihui

Nankai University - Business School

Wei Sun

University of International Business and Economics

Frank Zhou

University of Pennsylvania - The Wharton School

Date Written: January 6, 2021

Abstract

Can historical culture explain persistent regional differences in minority shareholder expropriation? We document that minority shareholder expropriation in Chinese public firms is negatively associated with regional Confucian culture, captured by data from the Qing Dynasty of Imperial China (1644--1912 AD). The results are robust to controlling for local economic development, enforcement of property rights, and geography and to using two instruments constructed from data in the Ming Dynasty (1368--1644 AD). The findings suggest that Confucian culture represents a fundamental force that constrains minority shareholder expropriation, which has important implications for capital market and economic development (Acemoglu, Johnson, and Robinson, 2001; Rajan and Zingales, 2003).

Keywords: Minority shareholder expropriation; Tunneling; Culture; Confucianism; Historical Persistence

JEL Classification: M14, N25, N95, O16, M41

Suggested Citation

Zhihui, Gu and Sun, Wei and Zhou, Frank, Culture and the Historical Persistence of Minority Shareholder Expropriation (January 6, 2021). Available at SSRN: https://ssrn.com/abstract=3761419 or http://dx.doi.org/10.2139/ssrn.3761419

Gu Zhihui

Nankai University - Business School ( email )

Weijin Road no.94
Tianjin 300071, 300071
China

Wei Sun

University of International Business and Economics ( email )

10 Huixindongjie, Chaoyang District
Beijing, 100029
China

Frank Zhou (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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