Impact on Agency Problems of China's Reform of the Split-Share Structure

China's unique split-share structure has resulted in serious agency problems. Moreover, the literature has shown that free cash flow and overinvestment problems are common in China's listed firms. This paper investigates the impact of the split-share structure reform on agency problems. The paper finds a decrease in investment-cash flow sensitivity after the reform of the split-share structure, which is evidence for a decrease in agency problems in China's listed firms after this reform. The result implies that the split-share structure reform has eased the agency problems in China's listed firms.