Initial Public Offering and Corporate Governance in China's Transitional Economy

Chien-Hsun Chen and Hui-Tzu Shih

No 9574, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper empirically investigates the performance of Chinese initial public offerings (IPOs). The data used covers the period from mid-1995 to mid-1999 with the sample including 884 companies (both in the A- and B-share markets). In an examination of growth, profitability and stability of listed companies either individually or as a combination, it can be seen that the only industries in which listed companies in China display strong performance are public utilities, transportation and finance. If one examines the changes in listed companies' financial indicators following the IPO, it becomes apparent that with the exception of earnings related indicators (EPS and ROE) there are no significant changes. What's more, the financial indicators tend to fall rapidly year on year. This means that the IPO is of little obvious help to companies' operational performance, and may actually make things worse. One of the reasons for this is that in order to implement the IPO and secure stock market listing, companies tend to submit inflated figures in the financial statements that they are required to provide. Another possible factor is the poor corporate governance characteristics of Chinese enterprises.

JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-cfn and nep-fmk
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Ito, Takatoshi and Anne O. Krueger (eds.) Governance, regulation, and privatization in the Asia-Pacific region NBER-East Asia Seminar on Economics, vol. 12. Chicago and London: University of Chicago Press, 2004.
Published as Initial Public Offering and Corporate Governance in China's Transitional Economy , Chen Chien-Hsun, Shih Hui-Tzu. in Governance, Regulation, and Privatization in the Asia-Pacific Region , Ito and Krueger. 2004

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