TY - JOUR
T1 - The impact of governmental intervention on the association between initial public offering and future stock issuance
AU - Gounopoulos, Dimitrios
AU - Guney, Yilmaz
AU - Leng, Jingsi
AU - Patsika, Viktoria
PY - 2020/10/30
Y1 - 2020/10/30
N2 - 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 SEOs in the Chinese context. The study examines three channels through which the Chinese government intervenes in equity issuance activities, namely 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 these results to the conflict between the state and minority shareholders, which leads to high uncertainty and risk in government‐intervened firms.
AB - 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 SEOs in the Chinese context. The study examines three channels through which the Chinese government intervenes in equity issuance activities, namely 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 these results to the conflict between the state and minority shareholders, which leads to high uncertainty and risk in government‐intervened firms.
U2 - 10.1111/1467-8551.12400
DO - 10.1111/1467-8551.12400
M3 - Article
SN - 1045-3172
VL - 31
SP - 665
EP - 687
JO - British Journal of Management
JF - British Journal of Management
IS - 4
ER -