OWNERSHIP STRUCTURE, MARKET LIQUIDITY, AND FIRM PERFORMANCE: EVIDENCE FROM CHINESE LISTED COMPANIES

Edward S. Hsieh ； Jun-Biao Lin ； Li-Jin Chiu ； Ching-I Ho

《Advances in Quantitative Analysis of Finance and Accounting》 17期 (2019/12) Pp. 217-258

https://doi.org/10.6293/AQAFA.201912_(17).0008

摘要

Because of rapid economic growth and continuing privatization reforms, the Chinese stock market has absorbed a great deal of capital from local and international investors, and become one of the most important markets. This paper investigates the effects of privatization reform on ownership structure and stock market liquidity on firm performance by using constituent companies of China Securities Index 300 (CSI 300). Using firm-year panel data from 2008 to 2015, we provide supportive evidence that firms with higher levels of stock market liquidity exhibit better performance. This result is robust to the inclusion of firm fixed effects and the use of alternative measures of market liquidity. As well, we find significant curvilinear relationships between firm performance and the fraction of shares owned by institutional investors, even after controlling for firm fixed effects. The effect of state ownership on firm performance is ambiguous in regard to the potential immature privatization program. Overall, our findings provide supportive evidence for the importance of market liquidity and institutional investors to the Chinese listed companies.

關鍵字

Institutional Ownership ； Market Liquidity ； Firm Performance

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