Corporate layers and corporate transparency in a transition economy: Evidence from China.
详细信息
文摘
With a proprietary data set, this thesis first investigates how corporate layers are determined, after which it analyzes the effects of corporate layers on corporate transparency. In chapter one, I find that corporate layers are set up to limit government control and interference in government-controlled listed companies. I document that the development of markets, legal systems and property rights protection in a region is associated with more corporate layers, limiting the control of government as an ultimate shareholder. Market developments and political incentives to interfere business are associated with fewer layers, allowing government to control the firms through direct ownership. The opposite is true for privately-controlled firms. The lack of development in markets, legal systems and property rights protection is associated with more layers in privately-controlled firms, which are used for hiding the identity and/or wealth of ultimate private owners and shielding them from government predation. In chapter two, listed companies are found to be more transparent when they get away from government through setting up more corporate layers in government-controlled firms. More layers between government agencies and listed companies are associated with stronger earnings-return relation. The corporate layers in government-controlled firms emerge as a mechanism to confine political interference and enhance corporate transparency. In companies controlled by private owners, the earnings do not have any explanatory power for stock returns and corporate layers are not associated with the firms' earnings-return relation.