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What determines the market share of investment banks in Chinese domestic IPOs?

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  • Huyghebaert, Nancy
  • Xu, Weidong

Abstract

In this paper, we empirically examine how government forces vis-à-vis market forces have affected the market share of investment banks in Chinese domestic IPOs over the period 1995–2010. Before 2005, only political connections significantly positively influenced the market share of investment banks. After 2005, the effect of political connections declined, while a low evaluation standard on IPO candidates and low underwriting fees now also significantly enhance market share. We explain these findings by the pro-competitive, yet partial changes that were introduced in the regulatory framework for IPOs, thereby emphasizing the need for a delicate policy coordination in marketization reforms.

Suggested Citation

  • Huyghebaert, Nancy & Xu, Weidong, 2015. "What determines the market share of investment banks in Chinese domestic IPOs?," China Economic Review, Elsevier, vol. 34(C), pages 150-168.
    • Handle: RePEc:eee:chieco:v:34:y:2015:i:c:p:150-168
    DOI: 10.1016/j.chieco.2015.05.001
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    More about this item

    Keywords

    IPO; Investment bank; Market share; Political connections; Information asymmetries;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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