Government Control and the Higher Costs of Going Public: Evidence from China's New Stock Market

Published: Mar 11, 2008
Abstract
IPO underpricing or the indirect cost of going public is extremely high in China. We hypothesize that government control over the corporate economy underlies this puzzle: Bureaucratic managers in state-owned firms as well as regulatory authorities have incentives to underprice. Using a sample of China's new stock market, we find evidence supporting this hypothesis. Underpricing is higher for state-owned firms and for IPOs before the reform which...
Paper Details
Title
Government Control and the Higher Costs of Going Public: Evidence from China's New Stock Market
Published Date
Mar 11, 2008
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