Pricing Of Non-tradable Shares In China

This dissertation investigates pricing of non-tradable shares of Chinese listed companies. It first gives a statistical analysis on the ownership concentration of Chinese stock companies and its evolution from 1994 to 2003. Then it analyses the real reason that caused the stock market to fall significantly in June 2001 when State Council issued the Provisional Rule for Raising Funds for Society Security through Liquidation of State Shares. The conclusion is that none of hypotheses except the information-release hypothesis can explain the reason, i.e. the investors considered the liquidation of state shares as the signal that the government would sell the state shares at high prices which led the market to fall. This dissertation also discusses various factors that affect the transfer prices of non-tradable shares. Through empirical tests the transfer prices of non- tradable shares on the whole embody the value of floating rights, value of corporate control, and value of corporate fundamentals. Finally, a proposal to settle the splitting between tradable and non- tradable shares is put forward.