Document Type

Journal Article

Department/Unit

Department of Marketing

Title

Privatization and risk sharing: Evidence from the split share structure reform in China

Language

English

Abstract

We study the share privatization process in China to investigate whether and how the removal of market frictions is associated with efficiency gains. Prior to the reform, domestic A-shares were divided into tradable and non-tradable shares. As a result of the reform, holders of non-tradable shares compensated holders of tradable shares in order to make their shares tradable. We show that size is positively associated with both the gain in risk sharing and the price impact of more shares coming on the market as a result of the reform. Our study highlights the role of risk sharing in China's share issue privatization process. © 2011 The Author. Published by Oxford University Press on behalf of the Centre for Crime and Justice Studies (ISTD). All rights reserved.

Publication Date

2011

Source Publication Title

Review of Financial Studies

Volume

24

Issue

7

Start Page

2499

End Page

2525

Publisher

Oxford University Press

DOI

10.1093/rfs/hhr025

Link to Publisher's Edition

http://dx.doi.org/10.1093/rfs/hhr025

ISSN (print)

08939454

ISSN (electronic)

14657368

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