Ownership and operating performance of Chinese IPOs |
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| Institution: | 1. Victoria Institute of Strategic Economic Studies, Victoria University, Melbourne, Australia;2. Directorate General of Taxes, Ministry of Finance, Jakarta, Indonesia;1. Nanjing University, School of Business, Nanjing, China;2. City University of Hong Kong, Accounting Department, Hong Kong, China;3. Chinese University of Hong Kong, School of Accountancy, Hong Kong, China;4. Zhejiang University of Finance & Economics, School of Accountancy, Hangzhou, Shanghai University of Finance & Economics, School of Accountancy, Xueyuan Street No.18, Xiasha Higher Education Park, Hangzhou 310018, Shanghai, China |
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| Abstract: | We examine changes in operating performance of Chinese listed companies around their initial public offerings, and focus on the effect of ownership and ownership concentration on IPO performance changes. We document a sharp decline in post-issue operating performance of IPO firms. We also find that neither state ownership nor concentration of ownership is associated with performance changes, but there is a curvilinear relation between legal-entity ownership and performance changes and between concentration of non-state ownership and performance changes. Our results are robust to different performance measures and industry adjustments. These findings suggest that agency conflicts, management entrenchment, and large shareholders’ expropriation co-exist to influence Chinese IPO performance, and the beneficial and detrimental effects of state shareholdings tend to offset each other. |
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