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Politicians, insiders and non-tradable share reform decisions in China

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  • Liao, Jing
  • Malone, Chris
  • Young, Martin

Abstract

We use the natural experiment provided by the non-tradable share (NTS) reform in China to examine how CEOs respond to a time-window within which they were able to convert non-tradable shares into tradable shares. We find that more politically connected firms delayed the conversion, on average. This aligns with the view that conversions diminished politically connected CEOs access to political benefits. More generally, this is evidence of political agency costs and reducing such costs, through initiatives such as the NTS reform, is important in establishing an efficient business environment.

Suggested Citation

  • Liao, Jing & Malone, Chris & Young, Martin, 2016. "Politicians, insiders and non-tradable share reform decisions in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 58-73.
    • Handle: RePEc:eee:intfin:v:43:y:2016:i:c:p:58-73
    DOI: 10.1016/j.intfin.2016.03.008
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    More about this item

    Keywords

    Non-tradable share reform; Politically connected CEOs; Top management; China;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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