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

Listed author(s):
  • Tong, Wilson H.S.
  • Yu, Wayne W.
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0261560611001410
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    Article provided by Elsevier in its journal Journal of International Money and Finance.

    Volume (Year): 31 (2012)
    Issue (Month): 2 ()
    Pages: 125-147

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    Handle: RePEc:eee:jimfin:v:31:y:2012:i:2:p:125-147
    DOI: 10.1016/j.jimonfin.2011.09.006
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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