Initial Public Offering and Corporate Governance in China's Transitional Economy
AbstractThis paper empirically investigates the performance of Chinese initial public offerings (IPOs). The data used covers the period from mid-1995 to mid-1999 with the sample including 884 companies (both in the A- and B-share markets). In an examination of growth, profitability and stability of listed companies either individually or as a combination, it can be seen that the only industries in which listed companies in China display strong performance are public utilities, transportation and finance. If one examines the changes in listed companies' financial indicators following the IPO, it becomes apparent that with the exception of earnings related indicators (EPS and ROE) there are no significant changes. What's more, the financial indicators tend to fall rapidly year on year. This means that the IPO is of little obvious help to companies' operational performance, and may actually make things worse. One of the reasons for this is that in order to implement the IPO and secure stock market listing, companies tend to submit inflated figures in the financial statements that they are required to provide. Another possible factor is the poor corporate governance characteristics of Chinese enterprises.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9574.
Date of creation: Mar 2003
Date of revision:
Publication status: published as Ito, Takatoshi and Anne O. Krueger (eds.) Governance, regulation, and privatization in the Asia-Pacific region NBER-East Asia Seminar on Economics, vol. 12. Chicago and London: University of Chicago Press, 2004.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Other versions of this item:
- Chen Chien-Hsun & Shih Hui-Tzu, 2004. "Initial Public Offering and Corporate Governance in China's Transitional Economy," NBER Chapters, in: Governance, Regulation, and Privatization in the Asia-Pacific Region, NBER East Asia Seminar on Economics, Volume 12, pages 185-210 National Bureau of Economic Research, Inc.
- G1 - Financial Economics - - General Financial Markets
- G3 - Financial Economics - - Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-25 (All new papers)
- NEP-CFN-2003-03-25 (Corporate Finance)
- NEP-FMK-2003-03-25 (Financial Markets)
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