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.
Original language | English |
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Pages (from-to) | 2499-2525 |
Number of pages | 27 |
Journal | Review of Financial Studies |
Volume | 24 |
Issue number | 7 |
DOIs | |
Publication status | Published - Jul 2011 |
Scopus Subject Areas
- Accounting
- Finance
- Economics and Econometrics