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Effects of borrowers' quality on the size of market response to bank loan announcements in China
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| Zeitschriftentitel: | Management Research Review |
|---|---|
| Personen und Körperschaften: | , , |
| In: | Management Research Review, 35, 2012, 5, S. 379-404 |
| Format: | E-Article |
| Sprache: | Englisch |
| veröffentlicht: |
Emerald
|
| Schlagwörter: |
| author_facet |
Zhang, Yuan Gan, Christopher Li, Zhaohua Zhang, Yuan Gan, Christopher Li, Zhaohua |
|---|---|
| author |
Zhang, Yuan Gan, Christopher Li, Zhaohua |
| spellingShingle |
Zhang, Yuan Gan, Christopher Li, Zhaohua Management Research Review Effects of borrowers' quality on the size of market response to bank loan announcements in China General Business, Management and Accounting |
| author_sort |
zhang, yuan |
| spelling |
Zhang, Yuan Gan, Christopher Li, Zhaohua 2040-8269 Emerald General Business, Management and Accounting http://dx.doi.org/10.1108/01409171211222313 <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p>The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where poor quality borrowers are prevalent and the banking system is highly controlled by the Chinese government.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p>The paper uses different measures to proxy for borrower quality, including the borrowers' information opaqueness, possibility of expropriation and their financial status. A cross‐sectional regression analysis was conducted to investigate the relationship between the market response to bank loan announcements and the borrowers' quality.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p>It is revealed that the negative market response to bank loan announcements is particularly significant for borrowing firms with lower quality, including firms that are opaque, have a higher possibility of expropriation or tunnelling, have ineffective expropriation‐reduction mechanisms, are controlled by the state and are in financial distress, for the sample period 1996 to 2009. Furthermore, to test whether there is any significant difference on the effects of the borrowers' quality on the size of the market response to bank loan announcements following China's announcement of share‐split reform in 2005, this paper splits the sample period into sub samples, 1996 to 2004 and 2004 to 2005. The results on the effects of the borrowers' quality on the size of market response to bank loan announcements for the sub sample period 1996 to 2004 are similar to those for the full sample 1996 to 2009.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Research limitations/implications</jats:title><jats:p>The paper's findings imply that the reforms in the Chinese financial market since 2005 do not have any significant effects on the borrowers' quality on the size of the market response to bank loan announcements for the full sample period.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p>This paper differs from previous studies in regards to the sample period and the measurements of the possibility of expropriation or tunnelling. The paper contributes to the banking and corporate governance literature.</jats:p></jats:sec> Effects of borrowers' quality on the size of market response to bank loan announcements in China Management Research Review |
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| title |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_unstemmed |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_full |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_fullStr |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_full_unstemmed |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_short |
Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_sort |
effects of borrowers' quality on the size of market response to bank loan announcements in china |
| topic |
General Business, Management and Accounting |
| url |
http://dx.doi.org/10.1108/01409171211222313 |
| publishDate |
2012 |
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379-404 |
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<jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p>The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where poor quality borrowers are prevalent and the banking system is highly controlled by the Chinese government.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p>The paper uses different measures to proxy for borrower quality, including the borrowers' information opaqueness, possibility of expropriation and their financial status. A cross‐sectional regression analysis was conducted to investigate the relationship between the market response to bank loan announcements and the borrowers' quality.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p>It is revealed that the negative market response to bank loan announcements is particularly significant for borrowing firms with lower quality, including firms that are opaque, have a higher possibility of expropriation or tunnelling, have ineffective expropriation‐reduction mechanisms, are controlled by the state and are in financial distress, for the sample period 1996 to 2009. Furthermore, to test whether there is any significant difference on the effects of the borrowers' quality on the size of the market response to bank loan announcements following China's announcement of share‐split reform in 2005, this paper splits the sample period into sub samples, 1996 to 2004 and 2004 to 2005. The results on the effects of the borrowers' quality on the size of market response to bank loan announcements for the sub sample period 1996 to 2004 are similar to those for the full sample 1996 to 2009.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Research limitations/implications</jats:title><jats:p>The paper's findings imply that the reforms in the Chinese financial market since 2005 do not have any significant effects on the borrowers' quality on the size of the market response to bank loan announcements for the full sample period.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p>This paper differs from previous studies in regards to the sample period and the measurements of the possibility of expropriation or tunnelling. The paper contributes to the banking and corporate governance literature.</jats:p></jats:sec> |
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| author | Zhang, Yuan, Gan, Christopher, Li, Zhaohua |
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| description | <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p>The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where poor quality borrowers are prevalent and the banking system is highly controlled by the Chinese government.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p>The paper uses different measures to proxy for borrower quality, including the borrowers' information opaqueness, possibility of expropriation and their financial status. A cross‐sectional regression analysis was conducted to investigate the relationship between the market response to bank loan announcements and the borrowers' quality.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p>It is revealed that the negative market response to bank loan announcements is particularly significant for borrowing firms with lower quality, including firms that are opaque, have a higher possibility of expropriation or tunnelling, have ineffective expropriation‐reduction mechanisms, are controlled by the state and are in financial distress, for the sample period 1996 to 2009. Furthermore, to test whether there is any significant difference on the effects of the borrowers' quality on the size of the market response to bank loan announcements following China's announcement of share‐split reform in 2005, this paper splits the sample period into sub samples, 1996 to 2004 and 2004 to 2005. The results on the effects of the borrowers' quality on the size of market response to bank loan announcements for the sub sample period 1996 to 2004 are similar to those for the full sample 1996 to 2009.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Research limitations/implications</jats:title><jats:p>The paper's findings imply that the reforms in the Chinese financial market since 2005 do not have any significant effects on the borrowers' quality on the size of the market response to bank loan announcements for the full sample period.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p>This paper differs from previous studies in regards to the sample period and the measurements of the possibility of expropriation or tunnelling. The paper contributes to the banking and corporate governance literature.</jats:p></jats:sec> |
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| spelling | Zhang, Yuan Gan, Christopher Li, Zhaohua 2040-8269 Emerald General Business, Management and Accounting http://dx.doi.org/10.1108/01409171211222313 <jats:sec><jats:title content-type="abstract-heading">Purpose</jats:title><jats:p>The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where poor quality borrowers are prevalent and the banking system is highly controlled by the Chinese government.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Design/methodology/approach</jats:title><jats:p>The paper uses different measures to proxy for borrower quality, including the borrowers' information opaqueness, possibility of expropriation and their financial status. A cross‐sectional regression analysis was conducted to investigate the relationship between the market response to bank loan announcements and the borrowers' quality.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Findings</jats:title><jats:p>It is revealed that the negative market response to bank loan announcements is particularly significant for borrowing firms with lower quality, including firms that are opaque, have a higher possibility of expropriation or tunnelling, have ineffective expropriation‐reduction mechanisms, are controlled by the state and are in financial distress, for the sample period 1996 to 2009. Furthermore, to test whether there is any significant difference on the effects of the borrowers' quality on the size of the market response to bank loan announcements following China's announcement of share‐split reform in 2005, this paper splits the sample period into sub samples, 1996 to 2004 and 2004 to 2005. The results on the effects of the borrowers' quality on the size of market response to bank loan announcements for the sub sample period 1996 to 2004 are similar to those for the full sample 1996 to 2009.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Research limitations/implications</jats:title><jats:p>The paper's findings imply that the reforms in the Chinese financial market since 2005 do not have any significant effects on the borrowers' quality on the size of the market response to bank loan announcements for the full sample period.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-heading">Originality/value</jats:title><jats:p>This paper differs from previous studies in regards to the sample period and the measurements of the possibility of expropriation or tunnelling. The paper contributes to the banking and corporate governance literature.</jats:p></jats:sec> Effects of borrowers' quality on the size of market response to bank loan announcements in China Management Research Review |
| spellingShingle | Zhang, Yuan, Gan, Christopher, Li, Zhaohua, Management Research Review, Effects of borrowers' quality on the size of market response to bank loan announcements in China, General Business, Management and Accounting |
| title | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_full | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_fullStr | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_full_unstemmed | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_short | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| title_sort | effects of borrowers' quality on the size of market response to bank loan announcements in china |
| title_unstemmed | Effects of borrowers' quality on the size of market response to bank loan announcements in China |
| topic | General Business, Management and Accounting |
| url | http://dx.doi.org/10.1108/01409171211222313 |