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Political Pressure or Rent Seeking? The Role of Mutual Funds in China's Split Share Structure Reform
Author(s) -
Jiang Ping,
Shao Xinjian,
Xue Yi
Publication year - 2018
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12125
Subject(s) - rent seeking , china , politics , corporate governance , business , compensation (psychology) , mutual fund , finance , economics , political science , psychology , law , psychoanalysis
In this paper, we provide further evidence on the role of mutual funds in China using the split share structure reform as an experiment. We find no supportive evidence for the political pressure hypothesis of Firth et al . (2010), but provide a set of unique results that are consistent with rent‐seeking behaviour by mutual funds. In addition, fund‐level governance can weaken the negative relationship between compensation ratio and fund ownership. Finally, we document a specific form of private benefits that can contribute to rent‐seeking behaviour by mutual funds.