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Governance, monitoring and foreign investment in Chinese companies

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  • Mishra, Anil V.
  • Ratti, Ronald A.

Abstract

This paper examines corporate governance and foreign equity home bias in Chinese companies. Free float measures are employed to account for bias introduced by insider control. It is found that foreign ownership relative to free float is negatively impacted by legal persons (large domestic cross company) holdings and positively related to large foreign institutional holdings, with the implication that the latter provide a monitoring function that reduces agency problems. Foreign ownership relative to free float is negatively related to firm size, possibly due to quasi government being the primary influence over insider control.

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Bibliographic Info

Article provided by Elsevier in its journal Emerging Markets Review.

Volume (Year): 12 (2011)
Issue (Month): 2 (June)
Pages: 171-188

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Handle: RePEc:eee:ememar:v:12:y:2011:i:2:p:171-188

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Web page: http://www.elsevier.com/locate/inca/620356

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Keywords: Home bias Monitors Foreign ownership Chinese stock market;

References

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Citations

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Cited by:
  1. Anil Mishra, 2014. "Foreign Ownership and Firm Value: Evidence from Australian Firms," Asia-Pacific Financial Markets, Springer, vol. 21(1), pages 67-96, March.
  2. Iatridis, George Emmanuel, 2012. "Audit quality in common-law and code-law emerging markets: Evidence on earnings conservatism, agency costs and cost of equity," Emerging Markets Review, Elsevier, vol. 13(2), pages 101-117.
  3. Groh, Alexander Peter & Wich, Matthias, 2012. "Emerging economies' attraction of foreign direct investment," Emerging Markets Review, Elsevier, vol. 13(2), pages 210-229.

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