abstract: The Chinese capital market is characterized by high segmentation due to governmental regulations. In this thesis I investigate both the causes and consequences of this market segmentations. Specifically, I address the following questions: (1) to which degree this capital market segmentation is caused by the fragmented regulations in China, (2) what are the key characteristics of this market segmentation, and (3) what are the impacts of this market segmentation on capital costs and resources allocations. Answers to these questions can have important implications for Chinese policy makers to improve capital market regulatory coordination and efficiency. I organize this thesis as follows. First, I define the concepts of capital market segmentation and fragmented regulation based on literature reviews and theoretical analysis. Next, on the basis of existing theories and methods in finance and economics, I select a number of indicators to systematically measure the degree of regulatory segmentation in China’s capital market. I then develop an econometric model of capital market frontier efficiency analysis to calculate and analyze China’s capital market segmentation and regulatory fragmentation. Lastly, I use the production function analysis technique and the even study method to examine the impacts of fragmented regulatory segmentation on the connections and price distortions in the equity, debt, and insurance markets. Findings of this thesis enhance the understanding of how institutional forces such as governmental regulations influence the function and efficiency of the capital markets. / Dissertation/Thesis / Doctoral Dissertation Business Administration 2015

The purpose of this study is to investigate whether the location of buying stocks in a Nordic cross-listed company matters in terms of 1) earning abnormal returns, or 2) gaining in optimizing the amount spent by buying the specific stock cheap. Nowadays, markets are becoming more integrated and if we believe in the efficient market hypothesis, prices of the same class of stocks paying the same dividend annually, of an MNC must be the same irrespective of the stock exchange it is listed upon. Though efficient market hypothesis exists in theory, market imperfection is a reality. All the Nordic (Swedish, Finnish, Norwegian, Danish and Icelandic) firms listed on foreign stock exchanges in addition to their home market have been included in the sample. In fact, this sample represents 100% of the population. The daily prices of cross-listed stocks have been analyzed and conclusions have been drawn based on the mean returns and mean prices along with Wilcoxon Signed-Rank test statistics. The data have been analyzed over the last ten years capturing the recent economic cycle. The whole period has also been divided into three sub-periods to establish comparisons with the whole period. This paper reports that even though returns on cross-listed stocks are statistically same over all periods, prices of the stocks vary according to the location of listing. That is, investors can buy from a stock exchange where the specific stock is underpriced thereby decreasing the amount invested in absolute term and optimizing the amount spent if not the return. The returns and prices have analyzed using the local currency of the MNC’s country of origin and Special Drawing Rights (SDRs). No considerable differences on the returns or pattern of price movements have been observed while using two currencies.