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Underwriter network structure and political connections in the Chinese IPO market

Lawren J. Rumokoy, Suman Neupane (), Richard Y. Chung and Kulunu Vithanage

Pacific-Basin Finance Journal, 2019, vol. 54, issue C, 199-214

Abstract: Using social network analysis, we examine China's equity underwriting network in the context of initial public offerings (IPOs), and we show that network centrality significantly enhances underwriter performance as measured by IPO outcomes. Among others, network centrality is positively associated with institutional participation and long-run performance. We further find that political connections contribute to the centrality of underwriters, as politically connected underwriters are not only highly connected, but also tied to well-connected peers. Our findings, which are robust to potential endogeneity bias, underscore the strategic importance of underwriter peer networks in the Chinese IPO process.

Keywords: Underwriters; Initial public offering; Networks; Political connections; China (search for similar items in EconPapers)
JEL-codes: G10 G24 L14 L25 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.pacfin.2017.10.005

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