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The going-public decision and rent-seeking activities: Evidence from Chinese private companies

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  • Lee, Chien-Chiang
  • Ning, Shaolin
  • Hsieh, Meng-Fen
  • Lee, Chi-Chuan

Abstract

This paper examines the determinants and consequences of going public for Chinese private companies during the process of reforms and opening up in China with a full sample that includes 584 initial public offerings (IPOs) of private companies and 584 of non-listed private companies from 2006 to 2014. Our results first reveal that the decision to go public is positively correlated to firm size and the market-to-book (MTB) ratio of the corresponding industry and negatively correlated to financial leverage and firm age. However, when considering the role of rent-seeking activities, the effect of the MTB ratio switches from positive to negative. The evidence also indicates that IPOs have a negative impact on firm performance, although they have a positive impact on the asset liability ratio and total assets afterwards. These findings offer several useful insights for policymakers and researchers.

Suggested Citation

  • Lee, Chien-Chiang & Ning, Shaolin & Hsieh, Meng-Fen & Lee, Chi-Chuan, 2020. "The going-public decision and rent-seeking activities: Evidence from Chinese private companies," Economic Systems, Elsevier, vol. 44(1).
    • Handle: RePEc:eee:ecosys:v:44:y:2020:i:1:s0939362518304369
    DOI: 10.1016/j.ecosys.2020.100744
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    More about this item

    Keywords

    Initial public offering; Going-public decision; Rent-seeking; Performance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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