英語(yǔ)翻譯
Based on the above classifications of financial conditions we examine the tunneling or propping behavior of the firm using the information from the announced connected transactions in Chinese listed firms.We classify the firms during the 1998-2004 period into three categories:sound financial conditions,poor financial conditions and the rest.We also classify the transactions into two types:connected transactions and non-connected ones.Finally,we further group these transactions into different:asset acquisitions,asset sales,asset displacements,cash payments,equity transfer,and others.We examine the market reactions to each of these transactions.We hypothesize that the market will react favorably when investors perceive that the controlling shareholders have incentives to prop,i.e.,when their financial condition is poor and it is a connected transaction.In contrast,we expect that the market will react unfavorably when investors perceive that the controlling shareholders have incentives to tunnel,i.e.,when their financial conditions are sound and the transaction is connected.Our results in general support our hypotheses.In particular,we find that there is a negative market reaction to connected transactions announcements,when the listed firms are in sound financial conditions and that there is a positive market reaction to the announced connected transactions when the listed firms face the risk of delisting or losing the rights to issue new shares.