Do bank loans still convey information to investors? Evidence from the split share structure reform in China

Bank loans can convey information about the borrowing firms that have proper corporate governance systems. Using a sample of bank loan announcements in China, we find market reaction is positive after split share structure reform 2005, which aligns interests large shareholders and minority shareholders, government public investors, alleviates their tunneling incentives. We also this effect more pronounced for private as mainly enhances firms. The signaling role less with severe asymmetry reform, e.g. higher shareholdings mutual funds proportion independent directors. Related party transactions decrease when they obtain reflects alleviation reform.