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