Why the Operating Performance of Post-IPO Firms Decreases: Evidence from China

Hai Long, Xiaochen Lin and Yu Chen
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Xiaochen Lin: International College, Krirk University, Bangkok 10220, Thailand
Yu Chen: International College, Krirk University, Bangkok 10220, Thailand

JRFM, 2021, vol. 14, issue 9, 1-15

Abstract: Based on a database of 200 listed firms from the Growth Enterprise Market of China, this paper employs regression models to investigate the significance of IPO capital expenditure to firms’ operating performance. It suggests that a vast majority of pre-IPO money is spent on business development to promote operating performance in order to meet IPO requirements. After the IPO, most of the money is transferred to equity investments in order to increase the firms’ market value quickly, which leads to operating performance decline and deterioration.

Keywords: post-IPO; firm performance; IPO capital; entrepreneurship (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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