Government, governance and finance: some corporate finance issues in China's emerging stock market

Tian, Lihui (2003) Government, governance and finance: some corporate finance issues in China's emerging stock market. Doctoral thesis, University of London: London Business School.

Abstract

This thesis documents the ownership and control, capital structures and initial public offerings of China's modem firms listed on its burgeoning stock market. I find that there is a U-shaped relation with a higher left end between the values of firms and the sizes of government shareholdings; managerial agency costs increase with the sizes of bank loans; and that governmental interests-centred financial regulations and China-specific investments risks bring about China's IPO under-pricing as severe as 267%. Three main findings show the profound impacts of the government on corporate governance and financial development. There are two hands of the government influencing the firms: a grabbing hand and a helping hand. The Chinese government is intelligent and sophisticated, but some social elites - both the managers and the bureaucrats -benefit from the widespread businesses of the government at the expense of corporate wealth.