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

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

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: Mar 10, 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