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Article: Corporate ownership, equity risk and returns in the People's Republic of China

TitleCorporate ownership, equity risk and returns in the People's Republic of China
Authors
KeywordsAgency Theory
China
Equity Risk
Governance
Ownership
Performance
Issue Date2008
PublisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jibs/index.html
Citation
Journal Of International Business Studies, 2008, v. 39 n. 7, p. 1149-1168 How to Cite?
AbstractA large body of literature has examined how managerial ownership affects corporate strategy and risk-taking. The present study extends this literature by investigating the effect of other forms of corporate ownership on a firm's equity risk (measured as the volatility of a company's stock returns) and stock returns in the People's Republic of China (PRC) - an important emerging economy that is rich in various forms of corporate ownership. We find that the various types of corporate ownership appear to have important but different impacts on equity risk and returns. In particular, companies with more state ownership tend to have higher stock volatility and lower stock returns; in contrast, companies with more legal-person ownership tend to have lower stock volatility and higher stock returns. Foreign and managerial ownership are found to have little effect on firms' equity risk and returns. These findings support the predictions of agency theory - for example, that state ownership increases agency conflicts in companies because bureaucrats and state agencies do not have the same economic incentives to maximize the value of firms. We believe that our study contributes to the international business literature on investment strategy and risk assessment in developing markets such as China, and as a result our findings could have important implications for international investors. © 2008 Academy of International Business All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/188457
ISSN
2015 Impact Factor: 3.62
2015 SCImago Journal Rankings: 4.208
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorZou, Hen_US
dc.contributor.authorAdams, MBen_US
dc.date.accessioned2013-09-03T04:07:39Z-
dc.date.available2013-09-03T04:07:39Z-
dc.date.issued2008en_US
dc.identifier.citationJournal Of International Business Studies, 2008, v. 39 n. 7, p. 1149-1168en_US
dc.identifier.issn0047-2506en_US
dc.identifier.urihttp://hdl.handle.net/10722/188457-
dc.description.abstractA large body of literature has examined how managerial ownership affects corporate strategy and risk-taking. The present study extends this literature by investigating the effect of other forms of corporate ownership on a firm's equity risk (measured as the volatility of a company's stock returns) and stock returns in the People's Republic of China (PRC) - an important emerging economy that is rich in various forms of corporate ownership. We find that the various types of corporate ownership appear to have important but different impacts on equity risk and returns. In particular, companies with more state ownership tend to have higher stock volatility and lower stock returns; in contrast, companies with more legal-person ownership tend to have lower stock volatility and higher stock returns. Foreign and managerial ownership are found to have little effect on firms' equity risk and returns. These findings support the predictions of agency theory - for example, that state ownership increases agency conflicts in companies because bureaucrats and state agencies do not have the same economic incentives to maximize the value of firms. We believe that our study contributes to the international business literature on investment strategy and risk assessment in developing markets such as China, and as a result our findings could have important implications for international investors. © 2008 Academy of International Business All rights reserved.en_US
dc.languageengen_US
dc.publisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jibs/index.htmlen_US
dc.relation.ispartofJournal of International Business Studiesen_US
dc.subjectAgency Theoryen_US
dc.subjectChinaen_US
dc.subjectEquity Risken_US
dc.subjectGovernanceen_US
dc.subjectOwnershipen_US
dc.subjectPerformanceen_US
dc.titleCorporate ownership, equity risk and returns in the People's Republic of Chinaen_US
dc.typeArticleen_US
dc.identifier.emailZou, H: hongzou@hku.hken_US
dc.identifier.authorityZou, H=rp01800en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1057/palgrave.jibs.8400394en_US
dc.identifier.scopuseid_2-s2.0-53549100167en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-53549100167&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume39en_US
dc.identifier.issue7en_US
dc.identifier.spage1149en_US
dc.identifier.epage1168en_US
dc.identifier.isiWOS:000259723700004-
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridZou, H=12769328900en_US
dc.identifier.scopusauthoridAdams, MB=7403905632en_US

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