Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/5524
Title: Does IPO Underpricing Explain a Firm's Long-Term Performance?: An Empirical Study of IPOs in China with Corporate Governance Perspective
Contributor(s): Li, Larry (author); Hovey, Martin  (author)
Publication Date: 2009
Handle Link: https://hdl.handle.net/1959.11/5524
Abstract: This is an empirical study that examines the underpricing and aftermarket long-term performance of IPOs in China and IPO underpricing. Corporate governance aspects that may play a role in IPOs, such as ownership structure and external directors, are studied. The study show that firms with higher initial IPO returns are valued more highly by investors - day-one, ten and 21 returns are correlated with long-term performance. Furthermore, the study finds that the ownership structure has a bearing on corporate governance - both foreign and legal person ownership have a positive influence on long-run performance. Management ownership may moderate State influences, but do not influence legal persons'. Conversely, State ownership has a negative bearing. Outside directors have no significant influence, nor has the issue stock exchange. The underwriter has a positive relationship with day-ten and 21 returns only. Larger firms and firms with growth potential are considered more highly by the market. Thus the study demonstrates that firms with higher initial IPO returns are valued more highly by investors long-term, as are firms with foreign and legal person holdings - the market expects these to enhance performance long-term. Management ownership is valued when associated with State ownership. Larger firms are considered more highly by the IPO market in China. The findings demonstrate that initial IPO returns influence the market value long-term and that ownership structure has a measurable bearing on long-term performance. In particular, firms with foreign holdings are considered more highly by the IPO market.
Publication Type: Conference Publication
Conference Name: 1st International Symposium on Corporate Governance in Privately Owned Firms, Sydney, Australia, 5-7 April 2009
Conference Details: 1st International Symposium on Corporate Governance in Privately Owned Firms, Sydney, Australia, 5-7 April 2009
Source of Publication: Symposium Proceedings 1st International Symposium on Corporate Governance in Privately Owned Firms, p. 1-35
Publisher: School of Business, Economics and Public Policy, Faculty of the Professions, University of New England
Place of Publication: Armidale, Australia
Field of Research (FOR): 150103 Financial Accounting
Socio-Economic Outcome Codes: 900199 Financial Services not elsewhere classified
HERDC Category Description: E2 Non-Refereed Scholarly Conference Publication
Other Links: http://ssrn.com/abstract=1009417
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