Propping acts by controlling shareholders are common in Chinese listed firms In this paper, we use data on related-party transactions of all listed Chinese firms from 2002 to 2008 to investigate the motivation behind ...Propping acts by controlling shareholders are common in Chinese listed firms In this paper, we use data on related-party transactions of all listed Chinese firms from 2002 to 2008 to investigate the motivation behind controlling share holders' propping acts and subsequent wealth-transfer behavior and how both affect firm performance. We find that such institutional motivators as the maintenance of shell resources and qualification for refinancing have a significant effect on the propping behavior of controlling shareholders of Chinese listed firms and that such behavior is often followed by more serious tunneling when shareholders are driven by these motivators. Compared with non-state owned firms, state-owned firms with the motivation to qualify for refinancing exhibit more severe tunneling after engaging in propping behavior. We also find that while propping by controlling shareholders improves a firm's current operating performance, in firms whose controlling shareholders' are motivated by the desire to maintain shell resources or obtain a refinancing qualification their performance declines in the following year because of subsequent tunneling. The results presented in this paper provide us with a better understanding of the relationship between propping and tunneling, controlling shareholders engagement in both and the consequences of that behavior.展开更多
As critical piece of China＇s gradualist economic transition, domestic price reform still faces major challenges. In particular, factor price, which is still tightlycontrolled and not market-based, is lower than marke...As critical piece of China＇s gradualist economic transition, domestic price reform still faces major challenges. In particular, factor price, which is still tightlycontrolled and not market-based, is lower than market equilibrium price. Factor price distortion not only reduces market efficiency but also affects wealth distribution. Subsequent wealth transfer has, over the past ten to fifieen years, created a powerful vested interests and spawned social resentment, both of which may constitute major hazards in China＇s future reform and development. Keeping in mind that China will have to address factor price distortion in its next step of reform, this paper takes stock of China＇s journey toward price rejorm; examines the relationship among factor price distortion, previous economic growth, and policy; and estimates＇ the size of resulting wealth transfer.展开更多
基金the National Natural Science Foundation of China(No.71003108)Soft Science Foundation ofGuangdong Province(2011B070400008)Research Fund of Sichuan University(skqy201312)
文摘Propping acts by controlling shareholders are common in Chinese listed firms In this paper, we use data on related-party transactions of all listed Chinese firms from 2002 to 2008 to investigate the motivation behind controlling share holders' propping acts and subsequent wealth-transfer behavior and how both affect firm performance. We find that such institutional motivators as the maintenance of shell resources and qualification for refinancing have a significant effect on the propping behavior of controlling shareholders of Chinese listed firms and that such behavior is often followed by more serious tunneling when shareholders are driven by these motivators. Compared with non-state owned firms, state-owned firms with the motivation to qualify for refinancing exhibit more severe tunneling after engaging in propping behavior. We also find that while propping by controlling shareholders improves a firm's current operating performance, in firms whose controlling shareholders' are motivated by the desire to maintain shell resources or obtain a refinancing qualification their performance declines in the following year because of subsequent tunneling. The results presented in this paper provide us with a better understanding of the relationship between propping and tunneling, controlling shareholders engagement in both and the consequences of that behavior.
文摘As critical piece of China＇s gradualist economic transition, domestic price reform still faces major challenges. In particular, factor price, which is still tightlycontrolled and not market-based, is lower than market equilibrium price. Factor price distortion not only reduces market efficiency but also affects wealth distribution. Subsequent wealth transfer has, over the past ten to fifieen years, created a powerful vested interests and spawned social resentment, both of which may constitute major hazards in China＇s future reform and development. Keeping in mind that China will have to address factor price distortion in its next step of reform, this paper takes stock of China＇s journey toward price rejorm; examines the relationship among factor price distortion, previous economic growth, and policy; and estimates＇ the size of resulting wealth transfer.
