Political connections and the long-term stock performance of Chinese IPOs

Jianlei Liu; Konari Uchida; Ruidong Gao

doi:10.1016/j.intfin.2012.05.005

Political connections and the long-term stock performance of Chinese IPOs

Jianlei Liu, Konari Uchida^*, Ruidong Gao

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

35 Citations (Scopus)

Abstract

We analyse the long-term stock performance of Chinese initial public offerings (IPOs) between the years of 2000 and 2007. The results reveal that firms with political connections experience better long-term stock performance. Our results suggest that the abolition of the Issuance Quota System and Channel Restriction System has a negative influence on the long-term performance of IPOs. This evidence is consistent with the view that local government officials are likely to select politically connected companies to go public.

Original language	English
Pages (from-to)	814-833
Number of pages	20
Journal	Journal of International Financial Markets, Institutions and Money
Volume	22
Issue number	4
DOIs	https://doi.org/10.1016/j.intfin.2012.05.005
Publication status	Published - 2012

Keywords

China
Initial public offerings
Long-term underperformance
Political connections
Regulations

ASJC Scopus subject areas

Economics and Econometrics
Finance

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10.1016/j.intfin.2012.05.005

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AB - We analyse the long-term stock performance of Chinese initial public offerings (IPOs) between the years of 2000 and 2007. The results reveal that firms with political connections experience better long-term stock performance. Our results suggest that the abolition of the Issuance Quota System and Channel Restriction System has a negative influence on the long-term performance of IPOs. This evidence is consistent with the view that local government officials are likely to select politically connected companies to go public.

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KW - Long-term underperformance

KW - Political connections

KW - Regulations

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Political connections and the long-term stock performance of Chinese IPOs

Abstract

Keywords

ASJC Scopus subject areas

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