IDEAS home Printed from https://ideas.repec.org/h/eme/afeczz/s1569-3732(07)12010-7.html
   My bibliography  Save this book chapter

Expropriation, Weak Corporate Governance and Post-IPO Performance: Chinese Evidence

In: Issues in Corporate Governance and Finance

Author

Listed:
  • Peng Cheng
  • Jean Jinghan Chen
  • Xinrong Xiao

Abstract

This study provides evidence that Chinese initial public offerings (IPOs) report better operating performance than industry peers in the pre-IPO period, and worse performance in post-IPO period compared to the pre-IPO level. We find that related party transactions (RPTs) with controlling shareholders have significant effects on the long-run performance of IPO firms. Controlling shareholders structure a large percentage of operating (non-loan) RPTs to artificially boost revenues and/or profits of their IPO subsidiaries in the pre-IPO period. However, in the post-IPO period, controlling shareholders discontinue this RPT-based earnings manipulation practice and begin to expropriate IPO subsidiaries by obtaining a large percentage of cash loans, primarily in return for profits and/or resources transferred into the IPO subsidiaries in the pre-IPO period. Finally, we find that state-controlled IPO firms with a highly concentrated ownership structure and a less independent board of directors are more likely to be expropriated by controlling shareholders in the post-IPO period through related loans.

Suggested Citation

  • Peng Cheng & Jean Jinghan Chen & Xinrong Xiao, 2007. "Expropriation, Weak Corporate Governance and Post-IPO Performance: Chinese Evidence," Advances in Financial Economics, in: Issues in Corporate Governance and Finance, pages 237-267, Emerald Group Publishing Limited.
  • Handle: RePEc:eme:afeczz:s1569-3732(07)12010-7
    DOI: 10.1016/S1569-3732(07)12010-7
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1016/S1569-3732(07)12010-7/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1016/S1569-3732(07)12010-7/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1016/S1569-3732(07)12010-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:afeczz:s1569-3732(07)12010-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.