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Journal of Business Ethics

, Volume 138, Issue 4, pp 765–785 | Cite as

Mutual Fund Activism and Market Regulation During the Pre-IFRS Period: The Case of Earnings Informativeness in China from an Ethical Perspective

  • Shujun Ding
  • Chunxin Jia
  • Zhenyu WuEmail author
Article

Abstract

This paper investigates the emerging effect of mutual fund involvement on the agency problem between majority and minority shareholders during the pre-IFRS period in China indicated by earnings informativeness from an ethical perspective. We find that the presence of mutual fund hampers earnings informativeness implying that mutual funds in general, at their early stage in China, are not yet capable of serving as an effective monitor. This finding is in sharp contrast to the role of institutional investors in mature markets as documented in the literature. However, mutual funds affiliated with banks have been found to be effective to improve earnings informativeness of Chinese listed companies, and the impact is more pronounced among those affiliated with joint-equity banks compared to their counterparts affiliated with state-owned banks.

Keywords

Corporate transparency Market regulation Mutual funds Monitoring Ethical perspective 

JEL Classification

M41 G34 G21 G18 

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© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.Telfer School of ManagementUniversity of OttawaOttawaCanada
  2. 2.Guanghua School of ManagementPeking UniversityBeijingChina
  3. 3.I.H. Asper School of Business, University of ManitobaWinnipegCanada

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