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Political participation and entrepreneurial initial public offerings in China

  • Feng, Xunan
  • Johansson, Anders C.
  • Zhang, Tianyu

This paper examines the economic consequences of political participation by entrepreneurs in China. Using unique data on political participation and initial public offerings by entrepreneurial firms, we find that firms controlled by entrepreneurs who participate in politics exhibit superior post-IPO performance. We also find that firms characterized by political participation are subject to less underpricing. Furthermore, the superior performance is concentrated among firms that operate in an environment characterized by rich rent-seeking opportunities instead of abundant business opportunities, suggesting that political participation is facilitating rent seeking rather than serving simply as a proxy for political recognition for entrepreneurship.

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Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 42 (2014)
Issue (Month): 2 ()
Pages: 269-285

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Handle: RePEc:eee:jcecon:v:42:y:2014:i:2:p:269-285
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622864

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