Document Type

Journal Article

Department/Unit

Department of Finance and Decision Sciences

Title

Does the market care about investor protection practices in China?

Language

English

Abstract

This study develops a scorecard with which to measure the investor protection practices of major listed firms in China during 2007–2010. We use time-series data to examine the relationship between the change in firm investor protection practices and market performance. Our results show that firms exhibiting improvements in investor protection practices manifest a subsequent increase in buy-and-hold abnormal returns. The results further indicate that the changes in the sub-index have different effects on a firm’s future performance. Shareholder rights to be rewarded seem to have the most significant and positive effect on a firm’s future performance for both local and international investors. Moreover, international investors pay attention to their rights to information. Our results provide evidence in support of the notion that the market does care about firm’s investor protection practices. The findings are robust to other measures of firm performance.

Keywords

Investor protection, firm performance, China

Publication Date

2017

Source Publication Title

Applied Economics

Publisher

Taylor & Francis

Peer Reviewed

1

Funder

This work was supported by the National Natural Science Foundation of China [71302010] and the Fundamental Research Funds for the Central Universities in UIBE [16JQ02]

DOI

10.1080/00036846.2017.1324612

ISSN (print)

00036846

ISSN (electronic)

14664283

This document is currently not available here.

Share

COinS