Effect of Legal Sanction for Shareholders’ Expropriation on the Corporate Valuation

The purpose of this paper is to study whether the legal sanction by relevant departments for the majority shareholders’ expropriation affects the valuation of the firms’ or other shareholders’ interests. This study takes the legal sanction by relevant departments for the majority shareholders’ expropriation as external legal environment change events, so whether the return of the listed company shows significant difference during the window before and after the listed company has been sanctioned by the relevant departments for the majority shareholders’ expropriation will be the judgment whether the sanction has any obvious effect on the listed company and the stock market. The study demonstrates that almost all empirical results show that the positive and negative effects don’t pass the significance test, illustrating that the legal sanction system just has limited effect on the corporate governance of the listed company.