Agency Conflicts, Expropriation and Firm Value: Evidence from Securities-Market Regulation in ChinaBerkman Henk, Rebel Cole and Lawrence Fu MPRA Paper from University Library of Munich, Germany Abstract: In this study, we examine the wealth effects of regulatory changes intended to improve corporate governance by protecting minority shareholders from expropriation by controlling shareholders. Using data from publicly traded Chinese firms, we find that these new regulations significantly increased firm value, and that firms with weak governance disproportionately benefited relative to firms with strong governance. Our evidence provides new support for the theory of La Porta et al. (2002) that better investor protection results in higher firm valuations. It also is supportive of the theory of Glaeser, Johnson and Shleifer (2001) that securities-market regulation can create substantial value for minority shareholders in a country with weak judicial enforcement. Finally, it is consistent with Black and Kraakman (1996), who argue that, in rule-based civil-law countries, regulation in the form of simple “bright-line rules” is more effective than in the form of “broad standards.” Keywords: agency costs; bright lines; China; convergence; corporate governance; enforcement; expropriation; independent director; investor protection; minority shareholder; regulation; tunneling. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52619 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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