Abstract
AbstractWe study the impact of stock market liberalisation through the Mainland China–Hong Kong Stock Connect (CHSC) program on the corporate financialisation of listed firms in Mainland China using the generalised difference‐in‐difference model in this paper. The empirical results show that implementing the CHSC program significantly reduces corporate financialisation of the listed firms in Mainland China by mitigating internal agency conflicts and enhancing external monitoring. Further analysis indicates that the inhibiting effect of stock market liberalisation through the CHSC program on corporate financialisation is more pronounced for firms without cross‐listing or qualified foreign institutional investors (QFII) ownership and firms with a more remarkable change of foreign ownership brought by the CHSC program.
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