Blockholding and Market Reactions to Equity Offerings in China
Cheung, William; Keith S.K. Lam; Lewis H.K. Tam
2012
Source PublicationPacific-Basin Finance Journal
ABS Journal Level2
ISSN0927-538X
Volume20Issue:3Pages:459-482
Abstract

We examine the impact of blockholding on shareholders' wealth in equity offerings in China. We find that investors generally react negatively to equity-offering announcements by firms with high blockholding. A one-standard-deviation (12%) increase in blockholding leads to a 0.59% reduction in firm valuation over a seven-day window and a 5.50% reduction over a 2-year period surrounding the announcement. Private (non-governmental) blockholding is associated with a more negative valuation effect than governmental blockholding over the long-term event window. The above result holds only for financially constrained firms but not unconstrained firms. Further analysis shows that firms with private blockholding have greater positive cash–cash flow sensitivity than firms with governmental blockholding, and again, the result holds for financial constrained firms only. Collectively, the findings suggest that equity offerings in China signal the issuers' future financial constraints, but the findings do not support the agency hypothesis of state ownership.

KeywordCash Flow Agency Problems Sensitivity Of Cash Blockholding Equity Offerings Financial Constraints
DOIhttps://doi.org/10.1016/j.pacfin.2011.12.002
Indexed BySSCI ; SSCI
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance
WOS IDWOS:000302445900008
Fulltext Access
Citation statistics
Cited Times [WOS]:7   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
AffiliationFaculty of Business Administration University of Macau, Macao, China
First Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Cheung, William,Keith S.K. Lam,Lewis H.K. Tam. Blockholding and Market Reactions to Equity Offerings in China[J]. Pacific-Basin Finance Journal,2012,20(3):459-482.
APA Cheung, William,Keith S.K. Lam,&Lewis H.K. Tam.(2012).Blockholding and Market Reactions to Equity Offerings in China.Pacific-Basin Finance Journal,20(3),459-482.
MLA Cheung, William,et al."Blockholding and Market Reactions to Equity Offerings in China".Pacific-Basin Finance Journal 20.3(2012):459-482.
Files in This Item:
There are no files associated with this item.
Related Services
Recommend this item
Bookmark
Usage statistics
Export to Endnote
Google Scholar
Similar articles in Google Scholar
[Cheung, William]'s Articles
[Keith S.K. Lam]'s Articles
[Lewis H.K. Tam]'s Articles
Baidu academic
Similar articles in Baidu academic
[Cheung, William]'s Articles
[Keith S.K. Lam]'s Articles
[Lewis H.K. Tam]'s Articles
Bing Scholar
Similar articles in Bing Scholar
[Cheung, William]'s Articles
[Keith S.K. Lam]'s Articles
[Lewis H.K. Tam]'s Articles
Terms of Use
No data!
Social Bookmark/Share
All comments (0)
No comment.
 

Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.