Loading…

A corporate governance explanation of the A-B share discount in China

B-shares listed in China are traded at substantial discounts to their corresponding A-shares although they have identical rights. We offer a governance explanation and suggest that relative to domestic investors, foreign investors care more about a firm’s governance quality. Results are supportive,...

Full description

Saved in:
Bibliographic Details
Published in:Journal of international money and finance 2012-03, Vol.31 (2), p.125-147
Main Authors: Tong, Wilson H.S., Yu, Wayne W.
Format: Article
Language:English
Subjects:
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:B-shares listed in China are traded at substantial discounts to their corresponding A-shares although they have identical rights. We offer a governance explanation and suggest that relative to domestic investors, foreign investors care more about a firm’s governance quality. Results are supportive, as the B-share price discount is higher for firms that have weaker governance characterized by 1) higher ownership concentration, 2) ineffective boards with a higher proportion of directors appointed by the parent company, 3) lower dividend payouts, and 4) higher levels of information asymmetry.
ISSN:0261-5606
1873-0639
DOI:10.1016/j.jimonfin.2011.09.006