Valuation of Restricted Shares: Evidence from the Split Share Structure Reform in China

In order to test and evaluate the influence of split share structure reform, an event study model is used in this paper. By introducing the unique characteristics of Chinese split share structure and the reform on 29th April, 2005, the CAR (cumulative abnormal returns) model can rationally explain the positive and negative effects of the reform around and after announcement. This paper provides the theoretical foundation of possible influence of the reform, identifying the potential fundamental factors. The role of structure ownership (state and institutional investors) in corporate governance by examining the differences in the payment of compensation would be the further study.