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Diversification of pre-IPO ownership and foreign IPO performance

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  • Ning Jia

    (Tsinghua University)

Abstract

We examine the diversification of pre-IPO ownership of foreign-listed firms and how the presence of pre-IPO shareholders from the host country affects foreign issuer’s subsequent IPO and post-IPO activities. Using a sample of foreign-listed Chinese firms, we find that the presence of pre-IPO shareholders from the host country is associated with a significant reduction in direct and indirect IPO costs, especially for issuers without international sales and for firms operating at a loss. Benefits of such pre-IPO affiliation persist into the post-IPO period as manifested in greater analyst coverage and better acquisition performance in the host country. Our paper provides new insight on the value of pre-IPO ownership diversification and identifies one strategy that firms can use to overcome the liability of foreignness.

Suggested Citation

  • Ning Jia, 2017. "Diversification of pre-IPO ownership and foreign IPO performance," Review of Quantitative Finance and Accounting, Springer, vol. 48(4), pages 1031-1061, May.
    • Handle: RePEc:kap:rqfnac:v:48:y:2017:i:4:d:10.1007_s11156-016-0577-x
    DOI: 10.1007/s11156-016-0577-x
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    More about this item

    Keywords

    Foreign IPO; Liability of foreignness; Pre-IPO ownership; Issuance costs; Acquisition;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • F30 - International Economics - - International Finance - - - General

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