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Does institutional reform improve the impact of investment bank reputation on the long-term stock performance of initial public offerings?

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  • Su, Chen

Abstract

This study examines the impact of investment bank (IB) reputation on the long-term stock price performance of Chinese initial public offerings (IPOs) over the period 1993 to 2010. For comparison purposes, the whole sample period is separated into two sub-periods by the 2001 IPO allocation system reform: the quota system period from January 1st, 1993 to April 22nd, 2001 (hereafter, the pre-reform period) and the approval system period from April 23rd, 2001 to December 31st, 2010 (hereafter, the post-reform period). Using two time-varying proxies for IB reputation, we find no impact of IB reputation on the three-year buy-and-hold abnormal returns (BHARs) during the pre-reform period, but a significantly positive impact during the post-reform period. Our results are robust to various alternative methodological approaches in controlling for the problem of endogeneity and the cross-sectional correlations in abnormal returns.

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  • Su, Chen, 2015. "Does institutional reform improve the impact of investment bank reputation on the long-term stock performance of initial public offerings?," The British Accounting Review, Elsevier, vol. 47(4), pages 445-470.
    • Handle: RePEc:eee:bracre:v:47:y:2015:i:4:p:445-470
    DOI: 10.1016/j.bar.2015.09.002
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    More about this item

    Keywords

    Investment bank reputation; IPO long-term stock performance; IPO allocation system reform; China stock market;
    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
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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