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CEO effects on the IPO market under different policy regimes: Evidence from the Chinese SME board

Yuanjing Ge, Haifeng Guo, Hung-Gay Fung and Kuncheng Guang

International Review of Economics & Finance, 2019, vol. 63, issue C, 163-175

Abstract: Significant policy changes were made in 2009 and 2014 with regard to the initial public offering (IPO) market in China, giving us an opportunity to examine the regulatory impact on the IPO market and CEO effects on IPO pricing under the different policies. After a policy of “window guidance” on IPO pricing was abolished in 2009, CEO attributes (e.g., political connections) played a significant role in revising the initial price to derive the offering price (i.e., the final price before going public) but no role in the short-term returns of the IPO post listing. The high offering prices set by CEOs likely explain the CEO effects on differential pricing. After the “window guidance” policy, with restrictive IPO pricing, was re-imposed in 2014 to correct over-pricing, which leads to the collapse of the IPO market. CEOs attributes have no effect on price revision but significantly affect IPO's short-term returns after listing, implying that this policy is too restrictive and triggers severe IPO underpricing.

Keywords: CEO attributes; IPO; Price revision; Short-term returns (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.iref.2018.08.023

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