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Political Pressure or Rent Seeking? The Role of Mutual Funds in China's Split Share Structure Reform

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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… Click to show full abstract

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.

Keywords: rent seeking; mutual funds; split share; funds china; role mutual

Journal Title: Australian Economic Papers
Year Published: 2018

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