TY - JOUR
T1 - Are future capital gain opportunities important in the market for corporate control? Evidence from China
AU - Dong, Liping
AU - Uchida, Konari
AU - Hou, Xiaohong
N1 - Funding Information:
An earlier version of this paper was presented at the Asian Finance Association, Darla Moore School of Business-Hitotsubashi University Conference on Corporate Finance, NCAS Conference, Midwest Finance Association, and Paris Financial Management Conference. We thank Sabri Boubaker, Jeffrey Coles, Natalia Gershun, Nobuaki Hori, Gregory Jackson, Yusuke Kinari, Jungwon Min, Hideo Owan, Donna Paul, and Min-Ming Wen, Stuart Gillan (editor), Kenneth Kim (guest editor), and an anonymous referee for their helpful comments and suggestions. This research is financially supported by the High-level Foster Funds Project of Beijing Wuzi University, Number GJB20161001, JSPS KAKENHI, Grant Number JP15H03367, and the JSPS Core-to-Core Program, A. Advanced Research Networks.
Funding Information:
An earlier version of this paper was presented at the Asian Finance Association, Darla Moore School of Business-Hitotsubashi University Conference on Corporate Finance, NCAS Conference, Midwest Finance Association, and Paris Financial Management Conference. We thank Sabri Boubaker, Jeffrey Coles, Natalia Gershun, Nobuaki Hori, Gregory Jackson, Yusuke Kinari, Jungwon Min, Hideo Owan, Donna Paul, and Min-Ming Wen, Stuart Gillan (editor), Kenneth Kim (guest editor), and an anonymous referee for their helpful comments and suggestions. This research is financially supported by the High-level Foster Funds Project of Beijing Wuzi University , Number GJB20161001 , JSPS KAKENHI, Grant Number JP15H03367 , and the JSPS Core-to-Core Program, A. Advanced Research Networks.
Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2020/8
Y1 - 2020/8
N2 - Stock prices of Chinese target companies react positively to the announcement of block trades. Such a reaction is greater when publicly tradable shares (PTS) are transferred than when bidders obtain nonpublicly tradable shares (NPTS). PTS transactions also perform significantly better in the long run than do NPTS transactions. These results suggest that stock liquidity matters for corporate control rights transactions to improve target firms' management. We also find that bidders appoint a new CEO or chief director in more than half of the cases of block trades. Better stock price performance for PTS transactions comes mainly from targets with high Tobin's Q. Capital gain opportunities are likely to motivate bidders to expand target firms' businesses for capital gains.
AB - Stock prices of Chinese target companies react positively to the announcement of block trades. Such a reaction is greater when publicly tradable shares (PTS) are transferred than when bidders obtain nonpublicly tradable shares (NPTS). PTS transactions also perform significantly better in the long run than do NPTS transactions. These results suggest that stock liquidity matters for corporate control rights transactions to improve target firms' management. We also find that bidders appoint a new CEO or chief director in more than half of the cases of block trades. Better stock price performance for PTS transactions comes mainly from targets with high Tobin's Q. Capital gain opportunities are likely to motivate bidders to expand target firms' businesses for capital gains.
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U2 - 10.1016/j.jcorpfin.2017.10.006
DO - 10.1016/j.jcorpfin.2017.10.006
M3 - Article
AN - SCOPUS:85037043816
SN - 0929-1199
VL - 63
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 101280
ER -