The stock market reaction to the 2005 split share structure reform in China

Andrea Beltratti, Bernardo Bortolotti, Marianna Caccavaio

Research output: Contribution to journalReview articlepeer-review


During 2005-2006, the Chinese government implemented the split share structure reform, aimed at eliminating non-tradable shares (NTS), i.e. the shares typically held by the State or by politically connected institutional investors that were issued at the early stage of financial market development. Our analysis, based on the time series of risk factors and on the cross-section of abnormal returns, confirms that the split share structure reform was particularly beneficial for small stocks, stocks characterized by historically poor returns, stocks issued by companies with low transparency and weak governance, and for less liquid stocks. Historically neglected stocks also witnessed an increase in the volume of trading and market prices. We conclude that the reform laid down the conditions for important future changes in ownership, liquidity and corporate governance in China.

Original languageEnglish (US)
Pages (from-to)543-560
Number of pages18
JournalPacific Basin Finance Journal
Issue number4
StatePublished - Sep 2012


  • Chinese stock market
  • Corporate governance
  • Financial reform
  • Neglected stocks
  • Ownership structure
  • Privatization

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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