*4.3. The Role of Split-Share Structure Reform on the Relationship between State Ownership, Concentration, and Financial Performance*

The mixed findings reported in the literature indicate the importance of interpreting results concerning the context where they occurred. That is, the context's institutions, regulations, and environment might matter in understanding the relationships under study [20]. In this regard, some studies argued that internal governance mechanisms such as ownership concentration become more vital in civil law—rather than common law contexts, where investors' legal protection is lower [62,70,106]. Relatedly, Lepore et al. [20] associated the positive effects of ownership concentration on company performance with contexts having lower levels of investor protection, as in many emerging economies. Nguyen et al. [28] reported that the positive impact of ownership concentration on corporate performance is more pronounced in settings with ineffective (rather than well-established) governance structures. This supports the idea that ownership concentration can work as a substitute governed system in contexts where internal governance systems are ineffective. Likewise, Altaf and Shah [16] show that the effectiveness of investor protection in India moderates the association between ownership concentration and corporate performance.

This understanding has encouraged recent studies to examine the different impacts of economic policies and other changes in financial regulations on governance issues. For example, Omran [70] addressed the effect of ownership structure on Egyptian companies' performance following the adoption of privatization programs in the country, reporting a positive relationship. In Hong Kong, Chen et al. [107] examined the association between (family) ownership and the adopted dividend policy and found a weak association.

From this perspective, it is argued that the recent stock split structure reform in China can impact the ownership concentration–corporate financial performance relationship. Some studies have addressed the economic implications of the reform e.g., [8,38,46,47]. However, few studies have examined the effect of the stock split reform on the ownership

structure–corporate financial performance relationship [39]. For instance, Jiang et al. [39] examined the expected ownership structures following the 2005 stock reform policy. They observed that ownership concentration is the most critical factor in the concerned relationship. Further, Beltratti et al. [38] concluded that the stock split reform opened the door for significant changes in ownership and governance that may improve the Chinese companies' performance. This study argues that the anticipated positive effect of ownership concentration can be more pronounced in the period following the reform than before the reform. Thus, we develop the third hypothesis as follows:
