Diversification of pre-IPO ownership and foreign IPO performance

Ning Jia ()
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Ning Jia: Tsinghua University

Review of Quantitative Finance and Accounting, 2017, vol. 48, issue 4, No 7, 1061 pages

Abstract: Abstract We examine the diversification of pre-IPO ownership of foreign-listed firms and how the presence of pre-IPO shareholders from the host country affects foreign issuer’s subsequent IPO and post-IPO activities. Using a sample of foreign-listed Chinese firms, we find that the presence of pre-IPO shareholders from the host country is associated with a significant reduction in direct and indirect IPO costs, especially for issuers without international sales and for firms operating at a loss. Benefits of such pre-IPO affiliation persist into the post-IPO period as manifested in greater analyst coverage and better acquisition performance in the host country. Our paper provides new insight on the value of pre-IPO ownership diversification and identifies one strategy that firms can use to overcome the liability of foreignness.

Keywords: Foreign IPO; Liability of foreignness; Pre-IPO ownership; Issuance costs; Acquisition (search for similar items in EconPapers)
JEL-codes: F30 G15 G24 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11156-016-0577-x

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