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- Title
Is the Stock Market Just a Side Show? Evidence from a Structural Reform.
- Authors
Campello, Murillo; Ribas, Rafael P.; Wang, Albert Y.
- Abstract
The 2005 split-share reform in China mandated the conversion of nontradable stocks into tradable status. This paper examines the effects of stock markets on corporate outcomes exploiting multiple institutional features of the Chinese conversion program. Using a generalized propensity score matching approach, we identify increases in corporate profitability, investment, value, and productivity as a result of the reform. We also identify changes in firms’ likelihood to issue shares and engage in mergers, as well as changes in dividend and capital structure policies. Our findings provide insights on the role of stock markets in shaping corporate activity and on the impact of regulation on economic growth. (JEL G31, C21, O16, D21)
- Subjects
NONTRADED goods; STOCK research (Finance); STOCK exchanges; FOREIGN exchange; ECONOMIC development research
- Publication
Review of Corporate Finance Studies, 2014, Vol 3, Issue 1/2, p1
- ISSN
2046-9128
- Publication type
Article
- DOI
10.1093/rcfs/cfu006