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The impact of governmental intervention on the association between initial public offering and future stock issuance

The impact of governmental intervention on the association between initial public offering and future stock issuance
The impact of governmental intervention on the association between initial public offering and future stock issuance
We examine the effect of initial public offering (IPO) characteristics on seasoned equity offering (SEO) decisions in relation to governmental intervention in China. Our results confirm the process of underpriced IPOs in promoting earlier and larger IPOs in the Chinese context. The study examines three channels through which the Chinese government intervenes in equity issuance activities named state ownership, politically connected executives and economic development areas. We find that the connection between IPOs and SEOs becomes less apparent in government-intervened firms. We attribute our results to the conflict between the state and minority shareholders, which leads to high uncertainty and risk in government-intervened firms.
1045-3172
Gounopoulos, Dimitrios
804d4ac1-e8e3-4489-9508-f200dd77c755
Guney, Yilmaz
47560a2d-52f0-434d-a75c-eb120bc7cd06
Leng, Jingsi
a59261a5-5c95-4d64-9650-19d340ee5d1c
Patsika, Viktoria
df2dcb8b-85e8-4461-8249-4f33512026c9
Gounopoulos, Dimitrios
804d4ac1-e8e3-4489-9508-f200dd77c755
Guney, Yilmaz
47560a2d-52f0-434d-a75c-eb120bc7cd06
Leng, Jingsi
a59261a5-5c95-4d64-9650-19d340ee5d1c
Patsika, Viktoria
df2dcb8b-85e8-4461-8249-4f33512026c9

Gounopoulos, Dimitrios, Guney, Yilmaz, Leng, Jingsi and Patsika, Viktoria (2020) The impact of governmental intervention on the association between initial public offering and future stock issuance. British Journal of Management. (doi:10.1111/1467-8551.12400).

Record type: Article

Abstract

We examine the effect of initial public offering (IPO) characteristics on seasoned equity offering (SEO) decisions in relation to governmental intervention in China. Our results confirm the process of underpriced IPOs in promoting earlier and larger IPOs in the Chinese context. The study examines three channels through which the Chinese government intervenes in equity issuance activities named state ownership, politically connected executives and economic development areas. We find that the connection between IPOs and SEOs becomes less apparent in government-intervened firms. We attribute our results to the conflict between the state and minority shareholders, which leads to high uncertainty and risk in government-intervened firms.

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More information

Accepted/In Press date: 15 January 2020
e-pub ahead of print date: 9 March 2020

Identifiers

Local EPrints ID: 438445
URI: http://eprints.soton.ac.uk/id/eprint/438445
ISSN: 1045-3172
PURE UUID: e3990178-7a83-4e4d-a0af-059968a856cd

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Date deposited: 10 Mar 2020 17:31
Last modified: 08 Oct 2020 16:37

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Contributors

Author: Dimitrios Gounopoulos
Author: Yilmaz Guney
Author: Jingsi Leng
Author: Viktoria Patsika

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