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The impact of governmental intervention on the association between initial public offering and future stock issuance

Gounopoulos, Dimitrios; Guney, Yilmaz; Leng, Jingsi; Patsika, Victoria

Authors

Dimitrios Gounopoulos

Yilmaz Guney

Jingsi Leng

Victoria Patsika



Abstract

We examine the effect of initial public offering (IPO) characteristics on seasoned equity offering (SEO) decisions in relation to governmental intervention in China. Our results confirm the process of underpriced IPOs in promoting earlier and larger IPOs in the Chinese context. The study examines three channels through which the Chinese government intervenes in equity issuance activities named state ownership, politically connected executives and economic development areas. We find that the connection between IPOs and SEOs becomes less apparent in government-intervened firms. We attribute our results to the conflict between the state and minority shareholders, which leads to high uncertainty and risk in government-intervened firms.

Citation

Gounopoulos, D., Guney, Y., Leng, J., & Patsika, V. (in press). The impact of governmental intervention on the association between initial public offering and future stock issuance. British Journal of Management, https://doi.org/10.1111/1467-8551.12400

Journal Article Type Article
Acceptance Date Jan 13, 2020
Online Publication Date Mar 9, 2020
Deposit Date Jan 15, 2020
Publicly Available Date Oct 27, 2022
Journal British Journal of Management
Print ISSN 1045-3172
Electronic ISSN 1467-8551
Publisher Wiley
Peer Reviewed Peer Reviewed
DOI https://doi.org/10.1111/1467-8551.12400
Keywords Initial Public Offerings; Seasoned Equity Offerings; State-Owned Enterprises; Governmental Intervention; Political Connections; China
Public URL https://hull-repository.worktribe.com/output/3362672
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8551.12400
Additional Information Received: 2019-01-19; Accepted: 2020-01-13; Published: 2020-03-09

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