 Property rights and access to equity capital in ChinaThomas J. Boulton Global Finance Journal, 2023, vol. 55, issue C Abstract: This study uses recent improvements to China's physical and intellectual property protections to test information asymmetry, signaling, and litigation risk theories of initial public offering (IPO) underpricing. We find robust evidence that stronger physical and intellectual property protections are associated with lower initial returns, especially among smaller IPOs and non-equity carve-outs. This result is consistent with the notion that property rights reduce information asymmetry among IPO participants; however, some of China's reforms, including the 2014 establishment of specialized intellectual property courts in Beijing, Shanghai, and Guangzhou, appear to have increased litigation risk. Additional tests indicate that property rights positively impact the likelihood that an IPO firm is backed by venture capital. Overall, these results are consistent with the idea that strong property rights help alleviate the adverse selection problem that results from information asymmetry among firms and equity investors. Keywords: China; Information asymmetry; Initial public offerings; Litigation risk; Property rights; Underpricing; Venture capital (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:55:y:2023:i:c:s1044028322000990 DOI: 10.1016/j.gfj.2022.100797 Access Statistics for this article Global Finance Journal is currently edited by Manuchehr Shahrokhi More articles in Global Finance Journal from Elsevier |
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