Governance, Monitoring and Foreign Investment in Chinese Companies

18 Pages Posted: 15 Nov 2009 Last revised: 6 Aug 2011

See all articles by Anil V. Mishra

Anil V. Mishra

Western Sydney University

Ronald A. Ratti

Western Sydney University - Department of Economics & Finance

Date Written: November 13, 2009

Abstract

This paper examines corporate governance and foreign equity home bias in Chinese companies. Free float measures are employed to account for bias introduced by insider control. It is found that foreign ownership relative to free float is negatively impacted by legal persons (large domestic cross company) holdings and positively related to large foreign institutional holdings, with the implication that the latter provide a monitoring function that reduces agency problems. Foreign ownership relative to free float is negatively related to firm size, possibly due to quasi overnment being the primary influence over insider control.

Keywords: Home bias, Monitors, Foreign ownership, Chinese stock market

JEL Classification: G1, G11, G15

Suggested Citation

Mishra, Anil V. and Ratti, Ronald A., Governance, Monitoring and Foreign Investment in Chinese Companies (November 13, 2009). Emerging Markets Review, Vol. 12, pp. 171-188, 2011, Available at SSRN: https://ssrn.com/abstract=1505805

Anil V. Mishra (Contact Author)

Western Sydney University ( email )

Locked Bag 1797
Penrith, NSW 1797
Australia
+61-2-9685 9230 (Phone)

Ronald A. Ratti

Western Sydney University - Department of Economics & Finance ( email )

Sydney, NSW 1797
Australia

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