Is the Equity Market Really Developed in the People's Republic of China?
Shirai, Sayuri | September 2002
Abstract
Since two domestic stock exchanges were established in the Peoples Republic of China (PRC) in the early 1990s, equity market growth has been remarkable. Nevertheless, the closer scrutiny reveals that the market is highly segmented and distorted. This paper assesses the state of the PRCs equity market development by focusing on its following three main functions(1) a source of stable financing for firms investment, (2) improving firms corporate governance and performance, and (3) signaling information on issuers to public investors. It concludes that the equity market has so far failed either to provide stable sources of finance for firms investment or improve their performance (indeed, firms performance has even deteriorated following initial public offerings). Moreover, while firms fundamentals have been reflected to a large extent in stock prices, suggesting that there is at least some signaling role, their co-movement has declined in recent years despite clampdowns against accounting malpractices. Indeed, it is likely that co-movement between stock prices and earnings per share has encouraged accounting manipulations to bump up stock prices. These findings suggest that PRCs equity market remains underdeveloped. If the Government is to privatize listed SOEs, the governance needs to introduce measures to prevent asset striping undertaken by managers of SOEs. Moreover, if the Government needs to develop a sound equity market, it must urgently improve the informational, legal, and judicial infrastructure, and educate public investors.
Citation
Shirai, Sayuri. 2002. Is the Equity Market Really Developed in the People's Republic of China?. © Asian Development Bank Institute. http://hdl.handle.net/11540/4147. License: CC BY 3.0 IGO.Keywords
Trade Finance
Rural Finance
Regional Development Finance
Public Financial Management
Public Finance
International Finance
Intergovernmental Finance
Financial System
Financial Flows
Financial Assets
Finance And Trade
Trade Finance
Local Finance
International Monetary Relations
Local Finance
Banks
Capital Market
financial statistics
Foreign trade
Municipal government
Metropolitan government
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Stock exchanges
Market
Exchange
Balance of trade
Show allCollapse
Citable URI
http://hdl.handle.net/11540/4147Metadata
Show full item recordUsers also downloaded
-
Annual Report 2014: Operational Data
Asian Development Bank (Asian Development Bank, 2015-01-01)The page has additional information for the ADB Annual Report 2014. In 2014, the Asian Development Bank (ADB) approved $22.93 billion in development assistance, including $13.69 billion financed by ADB’s ordinary capital resources and special funds, and a record $9.24 billion by cofinancing partners. Disbursements totaled $10.01 billion, an increase of $1.47 billion (17%) from 2013, and the first ...The page has additional information for the ADB Annual Report 2014. In 2014, the Asian Development Bank (ADB) approved $22.93 billion in development assistance, including $13.69 billion financed by ADB’s ordinary capital resources and special funds, ... -
Guidelines for Climate Proofing Investment in the Energy Sector
Asian Development Bank (Asian Development Bank, 2013-05-15)This publication provides a step-by-step methodological approach to help project teams assess and incorporate climate change adaptation measures into energy investment projects. While the focus of the Guidelines is at the project level, an improved understanding of climate change impacts should also be used to incorporate climate change considerations into energy planning and policy at the country level.This publication provides a step-by-step methodological approach to help project teams assess and incorporate climate change adaptation measures into energy investment projects. While the focus of the Guidelines is at the project level, an improved ... -
Pacific Choice: A Tale of Two CDs: Capacity Development and Community Development in the Waste, Water, and Sanitation Sector in Kiribati
Mackenzie, Uentabo (Asian Development Bank, 2008-06-30)"A 1993 Australian Agency for International Development (AusAID)–funded study reported that water and sanitation problems in South Tarawa, Kiribati had become critical and needed to be addressed in “as comprehensive a manner as possible.” This led to a series of interventions including several Asian Development Bank (ADB)–sponsored projects which focused on the community participation component that ..."A 1993 Australian Agency for International Development (AusAID)–funded study reported that water and sanitation problems in South Tarawa, Kiribati had become critical and needed to be addressed in “as comprehensive a manner as possible.” This led to ...