Doctoral thesis of philosophy investor protection and agency problems in family firms evidence from china

Investor Protection and Agency Problems in Family Firms: Evidence from China A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy Jing Zhou Bachelor of Management Master of Management School of Economics, Finance and Marketing College of Business RMIT University October 2011 DECLARATION I certify that except where due acknowledgement has been made, this thesis is the original work of the author alone; the thesis has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of thesis is the result of work which has been carried out since the official commencement date of approved research program; any editorial work, paid or unpaid, carried out by a third party is acknowledged; and ethics procedures and guidelines have been followed Signed: Jing Zhou October 2011 ACKNOWLEDGEMENTS The completion of the Ph.D thesis is not an ending, but signifying a new start for the next stage of my life and research Achieving this life long goal of mine could not have been possible without many people It is a pleasure to thank all of them, while the number is too large to mention each respectively I would like to start by showing my gratitude to my sponsors, the China Scholarship Council (CSC) and the School of Economics, Finance, and Marketing of RMIT University, for awarding me a life-changing opportunity to pursuit the doctoral degree in Melbourne Without their sponsorship, I would not be here I owe my deepest gratitude and respect to my principal supervisor, Professor On Kit Tam who was abundantly helpful and always offered unending patience, invaluable guidance and support throughout my Ph.D study and research I thank him not only for teaching me the value of research, but also for passing on me the precious wisdom to get along with people “The real long term benefit lies in getting the wisdom and right attitude to life, in the end that will definitely better prepare you to grow into a great scholar and teacher!” This word he has written for me will be always kept in my mind and guide me through all my life time With his continuous inspiration and encouragement, I am so confident to achieve success in my life and research in the near future I could not have imagined having a supervisor for my Ph.D study even better than him I am grateful to my second supervisor, Professor Tony Naughton, for his constructive advice and comments on my thesis My sincere thanks also goes to Professor Heather Mitchell for allowing me to attend her econometric classes and provide me with insightful opinions on the empirical analysis of my thesis The friendly help of Ms Prue Lamont and Ms Kalpana Lalji from the Business Research Office, the assistance of the staff of the school of Economics, Finance, and Marketing at RMIT University, the encouragement of Professor Changwen Zhao, and the procedural advice of Associate Professor Yingkai Tang at Sichuan University of China are most appreciated in many ways I am indebted to my many friends I will not be able to name them all here though I would like to give my heartfelt gratitude to my dear Ph.D friends, Paweena Khongchan, Chin Moi Loh, Ploy Sud-on, Kunlagan Boonyauva, Ping Yu, Ling Qi, Kornkanok Duangpracha, Rui Bi, Mingjuan Ding, and Xiaoshuang Shi for helping me get through the ii difficult times in Melbourne, and for all the emotional support, caring, entertainment and company they have provided They make my Ph.D life in Melbourne so meaningful and memorable I am also grateful to my best friends in China, Xiangyu Shang, Jie Liu, Ye Wang, Na Xu, and Xiaojiao Cai They have offered the warmest camaraderie to share with me through happiness and sorrow even thousands of miles away A special and sincere thank goes to Tingting Ye and Jiujiu Zhao who have provided me the homelike accommodation and helped me know about Australia at the beginning of my Melbourne life I cherish the friendship and will keep it in a dear place of my heart no matter how far we are physically from each other Lastly, and most importantly, I would like to thank my beloved father, Shungui Zhou, and mother, Yunfang Wang, for giving birth to me at the first place and raising me with all they have They have passed on me the most precious wealth – patience and courage – which inspire me being generous to others despite everything and continuously keeping self-improvement throughout my life iii TABLE OF CONTENTS CHAPTER INTRODUCTION 1.1 BACKGROUND 1.1.1 Studies on family-controlled firms 1.1.2 Development on the law and finance literature 1.2 MOTIVATION 1.3 OBJECTIVES OF THE THESIS 1.4 STRUCTURE OF THE THESIS 11 CHAPTER 13 LITERATURE REVIEW 13 2.1 INTRODUCTION 14 2.2 AGENCY THEORY 14 2.2.1 Agency problem between owners and managers 14 2.2.2 Agency problem between controlling and minority shareholders 17 2.3 DEFINITIONS OF A FAMILY FIRM 19 2.4 FAMILY GOVERNANCE AND FIRM PERFORMANCE 24 2.4.1 Family ownership and firm performance 26 2.4.2 Family control and firm performance 29 2.4.3 Family management and firm performance 30 2.5 LITERATURE ON LAW AND FINANCE 36 2.5.1 Law and finance 36 2.5.2 The role of investor protection 37 2.5.3 The role of alternative mechanisms 40 2.5.4 Investor protection and corporate governance 42 2.6 CHAPTER SUMMARY 44 CHAPTER 47 THEORETICAL ANALYSIS AND HYPOTHESES DEVELOPMENT 47 3.1 INTRODUCTION 48 iv 3.2 DUAL-TRIPLE AGENCY PROBLEMS 48 3.3 INVESTOR PROTECTION 51 3.4 HYPOTHESES DEVELOPMENT 52 3.4.1 The firm fully owned by the family 54 3.4.2 The firm not fully owned but controlled by the family 56 3.5 CONCLUSION 61 CHAPTER 62 METHODOLOGY 62 4.1 INTRODUCTION 63 4.2 PANEL DATA ANALYSIS 63 4.2.1 Two-stage least squares estimation of the fixed effects panel data models 63 4.2.2 Random effects estimation with panel data 65 4.3 REGRESSION MODELS 65 4.3.1 Models of investor protection and agency costs in family firms 66 4.3.2 Models of investor protection and family governance mechanisms 68 4.3.3 Models of family governance and agency costs in family firms 70 4.4 CHAPTER SUMMARY 72 CHAPTER 73 DATA 73 5.1 INTRODUCTION 74 5.2 SAMPLE 74 5.3 DEFINING A FAMILY FIRM: A NEW APPROACH 75 5.4 DATA SOURCES 77 5.5 DESCRIPTIVE STATISTICS OF FAMILY FIRMS 77 5.6 CHAPTER SUMMARY 81 CHAPTER 83 MEASUREMENT OF INVESTOR PROTECTION IN CHINA 83 6.1 INTRODUCTION 84 6.2 INVESTOR PROTECTION ON PAPER: LEGAL INVESTOR PROTECTION INDEX 85 6.2.1 Investor protection indices-a review 85 6.2.2 Development of investor protection in China 88 v 6.2.3 Measurement of legal investor protection index 90 6.2.4 Main results 96 6.3 INVESTOR PROTECTION IN PRACTICE: GOVERNANCE ENVIRONMENT INDEX 102 6.3.1 Measurement of the enforcement of investor protection-a review 103 6.3.2 Measurement of public governance environment index 104 6.3.3 Main results 105 6.4 CONCLUSION 110 CHAPTER 112 IMPACT OF INVESTOR PROTECTION ON AGENCY COSTS IN FAMILY FIRMS 112 7.1 INTRODUCTION 113 7.2 STATISTICS SUMMARY 115 7.3 RESULTS AND DISCUSSION 116 7.3.1 Correlation analysis 116 7.3.2 Diagnostic test 117 7.3.3 FE2SLS estimation of panel-data models 119 7.4 ROBUSTNESS CHECK 123 7.5 CONCLUSION 125 CHAPTER 127 IMPACT OF INVESTOR PROTECTION ON FAMILY GOVERNANCE MACHANISMS 127 8.1 INTRODUCTION 128 8.2 STATISTICS SUMMARY 130 8.3 RESULTS AND DISCUSSION 132 8.3.1 Categorical analysis 132 8.3.2 Correlation analysis 135 8.3.3 Random effects estimation 140 8.4 ROBUSTNESS TEST 143 8.5 CONCLUSION 145 CHAPTER 148 IMPACT OF FAMILY GOVERNANCE ON AGENCY COSTS IN FAMILY FIRMS 148 vi 9.1 INTRODUCTION 149 9.2 IMPACT OF FAMILY OWNERSHIP, CONTROL, AND MANAGEMENT 151 9.2.1 Main impact of family ownership, control, and management on performance 151 9.2.2 Interaction impact of family ownership, control, and management on performance 155 9.2.3 Founder effects on performance 159 9.2.4 Robustness test 162 9.3 INTERACTION IMPACT OF FAMILY GOVERNANCE AND INVESTOR PROTECTION ON PERFORMANCE 164 9.3.1 Main results 164 9.3.2 Robustness test 167 9.4 CONCLUSION 170 CHAPTER 10 173 CONCLUSION 173 10.1 INTRODUCTION 174 10.2 SUMMARY OF THIS THESIS 174 10.3 KEY CONTRIBUTIONS 179 10.4 LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH 182 REFERENCE 184 APPENDICES 197 vii LIST OF TABLES TABLE 2.1 SUMMARY OF DEFINITIONS OF FAMILY FIRMS IN THE LITERATURE 20 TABLE 5.1 NUMBER AND PERCENTAGE OF FAMILY FIRMS IN 2000-2009 A 78 TABLE 5.2 INDUSTRY DISTRIBUTION OF FIRMS BY CSRC STANDARD INDUSTRY CLASSIFICATION CODE (2001)A 80 TABLE 6.1 DEFINITIONS OF INDICATORS OF LLSVSH 86 TABLE 6.2 DEFINITIONS OF LEGAL INVESTOR PROTECTION INDICES 92 TABLE 6.3 CRITERIA FOR ADDING OR SUBTRACTING SCORES 95 TABLE 6.4 INDICES OF LEGAL INVESTOR PROTECTION FROM 1991-2009 98 TABLE 6.5 VARIABLES AND DESCRIPTION OF THE ENFORCEMENT OF INVESTOR PROTECTION IN THE LITERATURE 103 TABLE 6.6 VARIABLES AND DESCRIPTION OF GOVERNANCE ENVIRONMENT INDEX 105 TABLE 6.7 DESCRIPTIVE STATISTICS OF GOVERNANCE ENVIRONMENT INDEX AND THE CONSTITUENTS 106 TABLE 6.8 THE GOVERNANCE ENVIRONMENT INDEX OF INDIVIDUAL PROVINCES IN CHINA 107 TABLE 6.9 REGIONAL DISTRIBUTION OF THE GOVERNANCE ENVIRONMENT INDEX AND THE CONSTITUENTS 110 TABLE 7.1 DESCRIPTIVE STATISTICS OF MAIN VARIABLES 116 TABLE 7.2 CORRELATIONS OF MAIN VARIABLES 117 TABLE 7.3 DIAGNOSTIC TEST 118 TABLE 7.4 FE2SLS ESTIMATION OF THE EFFECTS OF INVESTOR PROTECTION ON FAMILY FIRMS 121 TABLE 7.5 FE2SLS ESTIMATION OF THE EFFECTS OF FORMAL INVESTOR PROTECTION ON FAMILY FIRMS 121 TABLE 7.6 FE2SLS ESTIMATION OF THE EFFECTS OF INVESTOR PROTECTION IN PRACTICE ON FAMILY FIRMS 122 TABLE 7.7 ROBUSTNESS TEST OF THE EFFECTS OF INVESTOR PROTECTION ON FAMILY FIRMS 123 TABLE 7.8 ROBUSTNESS TEST OF THE INDIVIDUAL EFFECTS OF INVESTOR PROTECTION ON FAMILY FIRMS 125 TABLE 8.1 DESCRIPTIVE STATISTICS OF MAIN VARIABLES 131 viii TABLE 8.2 IMPACT OF INVESTOR PROTECTION ON FAMILY OWNERSHIP, CONTROL, AND MANAGEMENT 135 TABLE 8.3 CORRELATIONS OF MAIN VARIABLES FOR FULL SAMPLE 136 TABLE 8.4 CORRELATIONS OF MAIN VARIABLES FOR FAMILY/OUTSIDER CEO SUBSAMPLE 138 TABLE 8.5 RE ESTIMATION OF IMPACT OF INVESTOR PROTECTION ON FAMILY GOVERNANCE MECHANISMS 142 TABLE 8.6 ROBUSTNESS OF THE IMPACT OF INVESTOR PROTECTION ON FAMILY GOVERNANCE MECHANISMS 143 TABLE 8.7 ROBUSTNESS OF RE ESTIMATION OF THE IMPACT OF INVESTOR PROTECTION ON FAMILY GOVERNANCE 144 TABLE 9.1 DIAGNOSTIC TEST 152 TABLE 9.2 FE2SLS ESTIMATION OF ROA ON FAMILY OWNERSHIP, CONTROL, AND MANAGEMENT 155 TABLE 9.3 INTERACTION IMPACT OF FAMILY OWNERSHIP, CONTROL, AND MANAGEMENT ON PERFORMANCE 157 TABLE 9.4 MEAN PERFORMANCE IN FOUNDER- AND RELATIVE-LED FAMILY FIRMS 158 TABLE 9.5 GROUPS OF FAMILY FIRMS LED BY FOUNDERS, RELATIVES OR OUTSIDERS 161 TABLE 9.6 MEAN PERFORMANCE WITH FOUNDERS, RELATIVES, OR OUTSIDERS AS CHAIRMAN OR CEO 161 TABLE 9.7 ROBUSTNESS TESTS OF EFFECTS OF FAMILY OWNERSHIP, CONTROL, AND MANAGEMENT ON PERFORMANCE 163 TABLE 9.8 ROBUSTNESS TESTS OF EFFECTS OF FAMILY GOVERNANCE IN DIFFERENT TYPES OF FAMILY FIRMS 164 TABLE 9.9 FE2SLS ESTIMATION OF INTERACTION EFFECTS OF FAMILY GOVERNANCE AND INVESTOR PROTECTION 166 TABLE 9.10 ROBUSTNESS TESTS OF INTERACTION EFFECTS OF FAMILY GOVERNANCE AND INVESTOR PROTECTION 168 TABLE 9.11 ROBUSTNESS TEST OF INTERACTION EFFECTS OF FAMILY GOVERNANCE AND INVESTOR PROTECTION 170 ix 1999 2000 2001 2002 2003 2004 12.10 3.17 7.01 12.08 5.18 6.06 6.07 6.15 7.01 3.15 3.19 3.28 4.06 6.18 10.08 12.10 1.07 1.15 6.22 7.24 9.05 12.01 12.01 12.13 1.06 2.01 3.24 3.26 6.24 8.28 12.01 12.22 1.06 1.07 12.07 -1.0 0.5 0.5 0.5 1.0 1.0 0.5 0.5 0.5 0.5 0.5 204 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 3.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.5 14.5 14.5 18.0 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0 2005 2006 2007 2008 2009 12.13 4.29 6.16 8.23 9.04 11.14 12.15 12.16 1.01 1.01 1.01 3.16 3.16 5.06 5.18 6.07 6.29 7.01 8.14 9.01 11.07 1.30 3.26 4.05 6.28 6.29 8.15 12.17 4.18 5.18 8.27 10.09 2.28 5.19 11.04 0.5 1.0 0.5 0.5 1.0 1.0 1.5 1.5 1.0 1.0 2.0 -1.0 -0.5 0.5 0.5 1.0 1.0 0.5 205 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.0 0.0 -0.5 1.5 0.5 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 20.5 29.5 29.5 29.0 30.5 31.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.5 32.5 32.5 Year 1991 1992 1993 1994 1995 1996 1997 1998 Date 3.03 5.15 10.00 4.22 6.12 9.02 12.17 1.01 1.10 6.25 7.01 9.28 10.27 11.03 11.03 12.21 1.24 2.10 4.22 6.29 7.24 8.01 12.20 1.10 1.06 3.03 4.01 10.01 12.16 2.20 6.18 12.10 EXIT 18 19 20 21 -1.0 1.0 2.0 2.0 T 0.0 -1.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TT 0.0 -1.0 -1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 SMINTEGR 22 23 24 25 1.0 26 27 2.0 28 1.0 2.0 1.0 0.5 1.0 0.5 0.5 1.0 1.5 0.5 0.5 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1.5 1.0 0.5 0.5 0.5 0.5 206 0.5 29 T 2.0 2.0 2.0 2.0 1.0 0.5 1.0 1.5 0.5 0.5 1.0 0.5 1.0 0.5 0.5 0.5 1.0 0.0 0.5 0.5 0.5 0.5 0.5 1.5 0.5 1.0 0.5 1.5 1.0 0.0 0.5 0.5 TT 2.0 4.0 6.0 8.0 9.0 9.5 10.5 12.0 12.5 13.0 14.0 14.5 15.5 16.0 16.5 17.0 18.0 18.0 18.5 19.0 19.5 20.0 20.5 22.0 22.5 23.5 24.0 25.5 26.5 26.5 27.0 27.5 1999 2000 2001 2002 2003 2004 3.17 7.01 12.08 5.18 6.06 6.07 6.15 7.01 3.15 3.19 3.28 4.06 6.18 10.08 12.10 1.07 1.15 6.22 7.24 9.05 12.01 12.01 12.13 1.06 2.01 3.24 3.26 6.24 8.28 12.01 12.22 1.06 1.07 12.07 12.13 1.5 0.5 0.5 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 4.0 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.5 6.5 6.5 0.5 1.0 0.5 1.5 0.5 1.5 0.5 0.5 0.5 1.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 207 0.5 4.0 0.5 0.0 1.0 0.5 0.5 1.5 0.5 0.5 0.5 0.5 0.0 0.5 0.5 1.0 0.0 0.5 0.5 0.5 0.5 0.0 0.5 0.5 0.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.0 0.0 0.5 28.0 32.0 32.5 32.5 33.5 34.0 34.5 36.0 36.5 37.0 37.5 38.0 38.0 38.5 39.0 40.0 40.0 40.5 41.0 41.5 42.0 42.0 42.5 43.0 43.0 43.5 44.0 44.5 45.0 45.5 46.0 46.5 46.5 46.5 47.0 2005 2006 2007 2008 2009 4.29 6.16 8.23 9.04 11.14 12.15 12.16 1.01 1.01 1.01 3.16 3.16 5.06 5.18 6.07 6.29 7.01 8.14 9.01 11.07 1.30 3.26 4.05 6.28 6.29 8.15 12.17 4.18 5.18 8.27 10.09 2.28 5.19 11.04 1.0 1.0 2.0 1.0 0.5 0.5 0.5 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.5 0.5 0.0 0.0 0.5 0.0 6.5 6.5 6.5 6.5 6.5 6.5 6.5 10.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.5 13.0 13.5 13.5 13.5 14.0 14.0 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1.0 1.0 1.0 0.5 0.5 0.5 0.5 1.5 1.5 1.0 1.0 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1.5 0.5 208 1.0 0.5 0.5 1.0 1.0 0.5 0.5 3.5 4.0 0.5 0.0 0.0 1.0 0.5 1.0 1.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.0 0.0 0.0 0.5 1.5 0.0 0.5 48.0 48.5 49.0 50.0 51.0 51.5 52.0 55.5 59.5 60.0 60.0 60.0 61.0 61.5 62.5 64.0 64.5 65.0 65.5 66.0 66.5 67.0 67.5 68.0 68.5 69.0 69.5 69.5 69.5 69.5 70.0 71.5 71.5 72.0 Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 Date 3.03 5.15 10.00 4.22 6.12 9.02 12.17 1.01 1.10 6.25 7.01 9.28 10.27 11.03 11.03 12.21 1.24 2.10 4.22 6.29 7.24 8.01 12.20 1.10 1.06 3.03 4.01 10.01 12.16 2.20 6.18 12.10 3.17 ANTIBLOCK 12 13 15 16 1.0 1.0 -1.0 20 21 25 26 1.0 1.0 1.0 0.5 2.0 2.0 1.0 1.0 -1.0 0.5 0.5 1.0 0.5 1.0 0.5 0.5 209 0.5 ST 0.0 2.0 0.0 2.0 0.0 0.5 0.0 0.0 0.0 0.0 5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 0.0 1.0 0.0 0.5 0.0 0.0 2.5 0.0 0.0 0.0 0.0 T 0.0 2.0 2.0 4.0 4.0 4.5 4.5 4.5 4.5 4.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 10.0 10.0 10.0 10.5 10.5 11.5 11.5 12.0 12.0 12.0 14.5 14.5 14.5 14.5 14.5 2000 2001 2002 2003 2004 2005 7.01 12.08 5.18 6.06 6.07 6.15 7.01 3.15 3.19 3.28 4.06 6.18 10.08 12.10 1.07 1.15 6.22 7.24 9.05 12.01 12.01 12.13 1.06 2.01 3.24 3.26 6.24 8.28 12.01 12.22 1.06 1.07 12.07 12.13 4.29 1.5 1.5 0.5 0.5 0.5 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 210 3.0 0.0 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 2.5 0.0 0.0 0.0 0.5 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.5 1.0 0.0 0.0 17.5 17.5 18.0 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 19.0 19.0 19.0 21.5 21.5 21.5 21.5 22.0 22.0 22.5 22.5 22.5 22.5 22.5 22.5 22.5 23.0 23.0 23.0 23.0 23.5 24.5 24.5 24.5 2006 2007 2008 2009 6.16 8.23 9.04 11.14 12.15 12.16 1.01 1.01 1.01 3.16 3.16 5.06 5.18 6.07 6.29 7.01 8.14 9.01 11.07 1.30 3.26 4.05 6.28 6.29 8.15 12.17 4.18 5.18 8.27 10.09 2.28 5.19 11.04 1.0 1.0 1.5 1.0 0.0 2.0 1.0 1.0 1.5 1.0 -0.5 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 211 0.0 0.0 0.0 0.0 0.0 0.0 9.0 2.0 -0.5 0.0 0.0 1.0 0.0 0.5 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.5 0.5 0.5 0.0 0.5 0.0 24.5 24.5 24.5 24.5 24.5 24.5 33.5 35.5 35.0 35.0 35.0 36.0 36.0 36.5 36.5 36.5 36.5 37.0 37.5 37.5 37.5 38.0 38.0 38.0 38.0 38.0 38.5 39.0 39.5 40.0 40.0 40.5 40.5 Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 Date 3.03 5.15 10.00 4.22 6.12 9.02 12.17 1.01 1.10 6.25 7.01 9.28 10.27 11.03 11.03 12.21 1.24 2.10 4.22 6.29 7.24 8.01 12.20 1.10 1.06 3.03 4.01 10.01 12.16 2.20 6.18 12.10 3.17 ANTIDIRECT 1.0 1.0 10 12 14 25 -1.0 26 1.0 1.0 0.5 1.0 1.0 2.0 2.0 2.0 -2.0 0.5 0.5 1.0 0.5 0.5 1.0 0.5 212 0.5 0.5 ST 0.0 2.0 0.0 1.0 0.0 0.5 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 0.0 1.0 0.0 0.5 0.0 0.0 3.0 0.0 0.0 0.0 0.0 T 0.0 2.0 2.0 3.0 3.0 3.5 3.5 3.5 3.5 3.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 10.0 10.0 10.0 10.5 10.5 11.5 11.5 12.0 12.0 12.0 15.0 15.0 15.0 15.0 15.0 2000 2001 2002 2003 2004 2005 7.01 12.08 5.18 6.06 6.07 6.15 7.01 3.15 3.19 3.28 4.06 6.18 10.08 12.10 1.07 1.15 6.22 7.24 9.05 12.01 12.01 12.13 1.06 2.01 3.24 3.26 6.24 8.28 12.01 12.22 1.06 1.07 12.07 12.13 4.29 1.5 -1.0 0.5 0.5 0.5 1.0 1.0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 213 1.5 0.0 -0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 3.5 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 1.5 0.0 0.0 16.5 16.5 16.0 16.5 16.5 16.5 16.5 16.5 16.5 16.5 16.5 17.0 17.0 17.0 20.5 21.0 21.0 21.0 21.5 21.5 21.5 21.5 21.5 22.0 22.0 22.0 22.0 22.5 22.5 22.5 22.5 22.5 24.0 24.0 24.0 2006 2007 2008 2009 6.16 8.23 9.04 11.14 12.15 12.16 1.01 1.01 1.01 3.16 3.16 5.06 5.18 6.07 6.29 7.01 8.14 9.01 11.07 1.30 3.26 4.05 6.28 6.29 8.15 12.17 4.18 5.18 8.27 10.09 2.28 5.19 11.04 1.0 1.0 0.5 0.5 1.0 1.5 1.0 1.0 2.0 1.0 1.5 1.0 1.0 1.0 0.5 0.5 0.5 0.5 214 0.0 0.0 0.0 0.0 0.0 0.0 11.0 1.0 0.0 1.5 0.5 1.0 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 24.0 24.0 24.0 24.0 24.0 24.0 35.0 36.0 36.0 37.5 38.0 39.0 39.0 39.5 39.5 39.5 39.5 39.5 40.0 40.0 40.0 40.5 40.5 40.5 40.5 40.5 40.5 40.5 40.5 41.0 41.0 41.0 41.0 Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 Date 3.03 5.15 10.00 4.22 6.12 9.02 12.17 1.01 1.10 6.25 7.01 9.28 10.27 11.03 11.03 12.21 1.24 2.10 4.22 6.29 7.24 8.01 12.20 1.10 1.06 3.03 4.01 10.01 12.16 2.20 6.18 12.10 3.17 ANTIMANAGE 10 -1.0 11 13 14 25 1.0 26 1.0 1.0 0.5 2.0 2.0 -2.0 0.5 0.5 1.0 0.5 0.5 0.5 0.5 215 ST 0.0 1.0 0.0 1.0 0.0 0.5 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 0.0 1.0 0.0 0.5 0.0 0.0 1.5 0.0 0.0 0.0 0.0 T 0.0 1.0 1.0 2.0 2.0 2.5 2.5 2.5 2.5 2.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 5.0 5.0 5.0 5.5 5.5 6.5 6.5 7.0 7.0 7.0 8.5 8.5 8.5 8.5 8.5 ANTINONTRADABLE 29 ST T 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2000 2001 2002 2003 2004 2005 7.01 12.08 5.18 6.06 6.07 6.15 7.01 3.15 3.19 3.28 4.06 6.18 10.08 12.10 1.07 1.15 6.22 7.24 9.05 12.01 12.01 12.13 1.06 2.01 3.24 3.26 6.24 8.28 12.01 12.22 1.06 1.07 12.07 12.13 4.29 1.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 216 1.5 0.0 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.0 10.0 10.5 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 12.0 12.5 12.5 12.5 13.0 13.0 13.0 13.0 13.0 13.5 13.5 13.5 13.5 14.0 14.0 14.0 14.0 14.0 14.0 14.0 14.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 2006 2007 2008 2009 6.16 8.23 9.04 11.14 12.15 12.16 1.01 1.01 1.01 3.16 3.16 5.06 5.18 6.07 6.29 7.01 8.14 9.01 11.07 1.30 3.26 4.05 6.28 6.29 8.15 12.17 4.18 5.18 8.27 10.09 2.28 5.19 11.04 1.5 1.0 0.0 2.0 1.0 1.5 1.0 0.5 0.5 0.5 217 0.0 0.0 0.0 0.0 0.0 0.0 7.0 1.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0 14.0 14.0 14.0 14.0 14.0 21.0 22.0 22.0 22.0 22.0 22.0 22.0 22.5 22.5 22.5 22.5 22.5 23.0 23.0 23.0 23.5 23.5 23.5 23.5 23.5 23.5 23.5 23.5 23.5 23.5 23.5 23.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 2.0 2.5 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 A6.2 The geographic and governance environment index of China China HLJ 5.04 JL 5.54 XJ 5.03 GS 4.43 HEB 6.63 NX 5.41 QH 4.07 SX 5.46 SAX 5.41 TB 2.32 TJ 7.07 SD 6.94 HEN 6.04 JS 8.35 AH 6.93 HUB 6.24 SC 6.73 SH 9.62 CQ 6.47 HUN 6.04 GZ 4.09 YN 6.10 ZJ 8.96 JX 5.32 FJ 7.37 GX 5.33 HAN 4.79 218 LN 6.81 BJ 7.33 IM 5.05 GD 8.26 ... protection of shareholders in local regimes in China The findings reveal that an increase in the effectiveness of the provincial enforcement of investor protection goes hand in hand with an increase... MEASUREMENT OF INVESTOR PROTECTION IN CHINA 83 6.1 INTRODUCTION 84 6.2 INVESTOR PROTECTION ON PAPER: LEGAL INVESTOR PROTECTION INDEX 85 6.2.1 Investor protection indices-a... objective is to define the presence and nature of main agency problems in family firms (Chapter 3) In the thesis, agency problems in family firms are deemed to include the conflict of interest between