ABSTRACT
In a decisive effort to lessen the dependence of state-owned enterprises (SOEs) on the government for financial support, reduce the use of debt financing, introduce market discipline, and foster a sound market economy, China opened the Shanghai Stock Exchange (SHSE) in December 1989 and the Shenzhen Stock Exchange (SZSE) in July 1991. There are two types of share classes listed on the domestic exchanges: A shares that are owned and traded by domestic investors; and B shares that are owned and traded by foreign investors in foreign currencies (U.S. dollars on the SHSE or Hong Kong dollars on the SZSE).
