IPO Reform and Venture Capital: Evidence from China

Yue Fei, Ulrich Hege and Xiao Jia
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Yue Fei: University of Mannheim = Universität Mannheim
Ulrich Hege: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Xiao Jia: HUST - Huazhong University of Science and Technology [Wuhan]

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Abstract: We study how IPO reforms transmit to venture capital (VC) markets using the introduction of China's entrepreneurial boards, ChiNext and the registration-based STAR. We document that both boards attract younger, higher-growth firms with weaker fundamentals in levels, but postIPO growth persists for ChiNext firms while decelerating sharply for STAR firms. VC backing plays different roles across regimes: on ChiNext it aligns with valuation premia and long-run outperformance, whereas on STAR it mainly predicts higher first-day returns. To identify causal effects on VC allocation, we construct novel text-based regulatory exposure measures from listing documents using keyword matching and Sentence-BERT semantic similarity, and show that VC financing reallocates toward firms more aligned with "supported" activities.

Keywords: Business Description; BERT; China; Venture Capital; IPO Listing Requirements; IPO Reforms (search for similar items in EconPapers)
Date: 2026-04-09
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