Venture capital investors and foreign listing choices of Chinese companies |
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| Institution: | 1. Univ. Lille, LSMRC, F-59000 Lille, France;2. Skema Business School, F-59777 Euralille, France;3. Université Côte d''Azur–SKEMA Business School, SKEMA Business School, Lille Campus, Department of Finance and Accounting, Avenue Willy Brandt, F-59777 Euralille, France;1. Accounting and Finance Group, International Business School Suzhou, Xi''an Jiaotong — Liverpool University, Suzhou, 215123, China;2. Department of Finance, Financial Planning, and Insurance, David Nazarian College of Business and Economics, California State University, Northridge, CA 91330-8379, USA;1. Shanxi University, China;2. University of Manitoba, Canada;3. Renmin University of, China;4. Xi''an University of Finance and Economics, China;1. Singapore Management University, Singapore;2. University of Wollongong, Australia;1. Graduate School of Business Administration, Kobe University, Japan;2. Schulich School of Business, York University, Canada |
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| Abstract: | We investigate the listing choice of Chinese VC-backed companies between a domestic market and foreign stock markets. Using a comprehensive sample of 2249 IPOs of Chinese companies that went public during the 1994–2013 period, we find that companies backed by Chinese domestic VCs are significantly less likely to list abroad while those backed by foreign VCs or co-invested by foreign and domestic VCs are significantly more likely to do so. We further find that the introduction of a domestic stock market for high-tech start-ups (the ChiNext Board) significantly reduces the likelihood to list abroad. However, the effect of VC participation largely disappears after the introduction of the ChiNext Board, in that the companies backed by foreign or co-invested VCs are more likely to list domestically. Moreover, we find that VC-backed IPOs have larger issuance sizes, but we find no impact on IPO underpricing of these Chinese companies. These results on IPO outcome hold for both the full sample and a matched sample using propensity score matching. |
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