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Which Firms went Public in China? A Study of Financial Market Regulation

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  • Du, Julan
  • Xu, Chenggang
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    Abstract

    Summary Plagued by a notoriously weak legal system, China has developed an alternative governance system based on de facto regulatory decentralization in its financial market development, in which regional governments are responsible for selecting state-owned enterprises (SOEs) to go public. The effect of this regulatory system has been highly controversial but evidence is very scant in the literature. This paper shows that regional governments tended to choose better-performing SOEs in the pre-listing stage to go public, and thus substantial stock market investment funds were channeled into potentially productive companies. China's experience demonstrates that administrative governance of capital markets may have been instrumental in jump starting capital markets in the absence of adequate market-supporting legal institutions.

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    Bibliographic Info

    Article provided by Elsevier in its journal World Development.

    Volume (Year): 37 (2009)
    Issue (Month): 4 (April)
    Pages: 812-824

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    Handle: RePEc:eee:wdevel:v:37:y:2009:i:4:p:812-824

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    Web page: http://www.elsevier.com/locate/worlddev

    Related research

    Keywords: Asia China regulatory decentralization financial market regulation IPO firm screening regional competition;

    References

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    Cited by:
    1. Su, Chen & Brookfield, David, 2013. "An evaluation of the impact of stock market reforms on IPO under-pricing in China: The certification role of underwriters," International Review of Financial Analysis, Elsevier, vol. 28(C), pages 20-33.
    2. Böing, Philipp & Müller, Elisabeth & Sandner, Philipp, 2013. "In-house R&D and External Knowledge Acquisition What Makes Chinese Firms Productive?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80037, Verein für Socialpolitik / German Economic Association.
    3. Jiang, Zhan & Kim, Kenneth A., 2013. "Financial management in China," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 125-133.
    4. Hasan, Iftekhar & Song, Liang & Wachtel, Paul, 2014. "Institutional development and stock price synchronicity: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 92-108.
    5. Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 74-90.
    6. Hasan, Iftekhar & Song, Liang & Wachtel , Paul, 2013. "Institutional development and stock price synchronicity: Evidence from China," BOFIT Discussion Papers 20/2013, Bank of Finland, Institute for Economies in Transition.

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