Managerial Structure and Stock Price Delay in China

50 Pages Posted: 26 Dec 2014

See all articles by Ping-Wen Sun

Ping-Wen Sun

Minjiang University - Newhuadu Business School

Bin Yu

Jiangxi University of Finance and Economics

Date Written: December 24, 2014

Abstract

We investigate how characteristics of the board of directors and top management affect a firm’s stock price delay in China. Using A-shares listed on both Shanghai and Shenzhen stock exchanges from May 2003 to April 2014, we find firms with stocks in the highest price delay decile portfolio have fewer directors and top managers, lower state ownership, higher director and top management ownership, younger top management team, and lower probability of CEO-Chair separation. Firm-level analysis shows that the number of directors, the number of top managers, and CEO-Chair separation significantly negatively correlate with the stock price delay after controlling liquidity and investor attention variables. After we separate a firm’s price delay into director, top management, liquidity, attention, and state ownership components, we find only liquidity and attention components of price delay contribute to the monthly price delay premium of 1.47% from May 2004 to April 2014 in China.

Keywords: board of directors, top management, price delay, A-shares, China

JEL Classification: G11, G14, G34

Suggested Citation

Sun, Ping-Wen and Yu, Bin, Managerial Structure and Stock Price Delay in China (December 24, 2014). Available at SSRN: https://ssrn.com/abstract=2542534 or http://dx.doi.org/10.2139/ssrn.2542534

Ping-Wen Sun (Contact Author)

Minjiang University - Newhuadu Business School ( email )

Fujian
China

Bin Yu

Jiangxi University of Finance and Economics ( email )

South Lushan Road
Nanchang, Jiangxi 330013
China

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