Provincial economic performance and underpricing of IPOs: Evidence from political interventions in China

Jianlei Liu, Konari Uchida and Yuan Li

Economic Modelling, 2020, vol. 86, issue C, 274-285

Abstract: We examine the underpricing of 2,131 Chinese initial public offerings (IPOs) between 2005 and 2017. The results indicate that state-owned enterprises (SOEs) controlled by the local government (local SOEs) offer significantly higher underpricing when they go public than SOEs controlled by the central government and non-SOEs do. This phenomenon is evident for local SOEs from less developed provinces, after controlling for the direct effect of regional economic performance. These results suggest local government officials underprice initial public offerings to make regional companies successfully go public to promote the regional economy.

Keywords: Chinese IPOs; Underpricing; Provincial economic performance; State-owned enterprises; Local government officials (search for similar items in EconPapers)
JEL-codes: G32 O16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:86:y:2020:i:c:p:274-285

DOI: 10.1016/j.econmod.2019.09.055

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