Non-tradable Share Reform and Tradable Shareholders＇ Wealth： An Event Study Analysis

On April 29, 2005, the reform of non-tradable shares was started. 46 companies were selected as the first and second batches of non-tradable share pilot reform, and among them 45 pilot companies finished their non-tradable share reform. This study examines the abnormal stock returns of the 45 pilot companies finishing their non-tradable share reform to determine whether tradable shareholders gain profits from this non-tradable share reform. By employing event study analysis, we find that tradable shareholders do gain profits from the non-tradable share reform. The average abnormal return of the 45 pilot companies was 10.62% on the resumption trading day after they finished their non-tradable share reform, which was statistically significant. We also find that the average abnormal return of high-compensation package group is significantly higher than that of low-compensation package group.

Analysis on auditing problems in SOEs joint share system reform

At the present stage of the SOEs joint share system reform, the problem of distorted accounting information, the failed financial audit and the ensuing erosion of the state： Owned assets, have severely impeded the process of the SOEs reform. This paper conducts an in-depth analysis on auditing problems in the process of the SOEs reform from managerial points of view, makes the suggestion that we should introduce governmental audit into the auditing supervision of the SOEs reform, and discusses its methods, approaches, contents and procedures in detail. This paper also indicates the possible obstacles of implementing this suggestion.

Fiscal pressure and local economic growth--An experiment from China income tax sharing system reform

In this paper,we construct an“as-if”DID model on the basis of the 2002“Income Tax Sharing System”reform and evaluate the changes in local fiscal pressure based on an exogenous shock that redefines the tax sharing rules between the central government and local governments.By using the DMSP/OLS satellite data at the city-level,we empirically examine the impact of fiscal pressure on the economic growth.We find that fiscal pressure significantly increase the satellite lighting.Furthermore,we obtain the findings as follows.Firstly,the incentive effects of fiscal pressure effects are less profound in cities that receive considerable intergovernmental transfers from high levels of governments.Secondly,the local governments are more likely to help the growth of real estate industry,which can reciprocally bring them considerable sales taxation.However,this homogenized growth pattern might be detrimental for economic diversification and finally enhance the risk of economical fluctuation.Finally,the fiscal pressure created by the reform restricts the extent to which jurisdictions compete with each other.However,the tax competition still exists because local governments are able to lower the tax rate once they gain enough revenues from land-sales.This paper provides a new explanation for China’s high-speed growth in addition to expenditure decentralization or administration decentralization.It also offers extra evidence for exploring the growth incentives of local government within the framework of China’s decentralization.

Government Regulation,Enforcement,and Economic Consequences in a Transition Economy:Empirical Evidence from Chinese Listed Companies Implementing the Split Share Structure Reform

In a changing transition economy, Chinese government regulations that adopt the relatively simple bright line rule formula are enforceable in practice. Taking the early reform-oriented policies of the China Securities Regulatory Commission(CSRC) as an example, we find that the CSRC did not consider local enthusiasm for reform when allocating IPO resources because of the high enforcement costs involved. We also find that CSRC listed company regulations were enforced due to the lower costs involved in verifying regulatory violations, and that listed companies that completed the reform process were given priority in public refinancing. We present empirical evidence supporting the theoretical basis for the hypotheses outlined above. We also conclude that companies that completed the reform process in 2005 were of significantly higher quality and that the SEO regulation did not affect stock market efficiency. These findings enhance our understanding of the efficiency of government regulation in a transition economy.

China’s State Share Reform and Exchange Traded Funds

One of the major difficulties blocking China＇s path to becoming a developed capital market is the “state share overhang” problem that hampers the development of the stock market. With almost two-thirds of the outstanding shares of the stock market owned by the central government, investors are wary of the potential sell-off by the government that would inevitably dilute the value of their stock holdings. In this paper, we review the state share reform that aims at solving the dilemma that the central government faces： releasing billions of dollars of government＇s capital locked up in the nontradable stocks of the state-owned enterprises （SOEs） without suppressing the stock prices. We also discuss the alternative of using exchange traded funds （ETFs） as a complementary means to expediting the state share conversion process.

State ownership and firm performance: Empirical evidence from Chinese listed companies

While the relationship between state ownership and firm performance has been widely researched, the empirical evidence has provided mixed results. This study applies panel data regression techniques to 10,639 firm-year observations of nonfinancial Chinese listed firms during 2003–2010 to examine the relationship between state ownership and firm performance. The results show that state ownership has a U-shaped relationship with firm performance. The Split Share Structure Reform in2005–2006 played a positive role in enhancing the relationship between state ownership and firm profitability ratios. Although state ownership decreased significantly after 2006, it remains high in strategically important industry sectors such as the oil, natural gas and mining sector and the publishing, broadcasting and media sector. The findings reveal that a higher level of state ownership is superior to a dispersed ownership structure due to the benefits of government support and political connections. The Split Share Structure Reform made previously nontradable shares legally tradable, improving corporate governance and reducing the negative effect of non-tradable state shares.