Abstract
We examine the wealth effects of 3 regulatory changes designed to improve minority-shareholder protection in the Chinese stock markets. Using the value of a firm's related-party transactions as an inverse proxy for the quality of corporate governance, wefind that firms with weaker governance experienced significantly larger abnormal returns around announcements of the new regulations than did firms with stronger governance. We also find that firms with strong ties to the government did not benefit from the regulations, suggesting that minority shareholders did not expect regulators to enforce the new rules on firms where blockholders have strong political connections.
| Original language | English |
|---|---|
| Pages (from-to) | 1391-1417 |
| Number of pages | 27 |
| Journal | Journal of Financial and Quantitative Analysis |
| Volume | 45 |
| Issue number | 6 |
| DOIs | |
| Publication status | Published - Dec 2010 |
| Externally published | Yes |