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Which Firms went Public in China? A Study of Financial Market Regulation


  • Du, Julan
  • Xu, Chenggang


Summary Plagued by a notoriously weak legal system, China has developed an alternative governance system based on de facto regulatory decentralization in its financial market development, in which regional governments are responsible for selecting state-owned enterprises (SOEs) to go public. The effect of this regulatory system has been highly controversial but evidence is very scant in the literature. This paper shows that regional governments tended to choose better-performing SOEs in the pre-listing stage to go public, and thus substantial stock market investment funds were channeled into potentially productive companies. China's experience demonstrates that administrative governance of capital markets may have been instrumental in jump starting capital markets in the absence of adequate market-supporting legal institutions.

Suggested Citation

  • Du, Julan & Xu, Chenggang, 2009. "Which Firms went Public in China? A Study of Financial Market Regulation," World Development, Elsevier, vol. 37(4), pages 812-824, April.
  • Handle: RePEc:eee:wdevel:v:37:y:2009:i:4:p:812-824

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    References listed on IDEAS

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    Cited by:

    1. Su, Chen & Brookfield, David, 2013. "An evaluation of the impact of stock market reforms on IPO under-pricing in China: The certification role of underwriters," International Review of Financial Analysis, Elsevier, vol. 28(C), pages 20-33.
    2. Hasan, Iftekhar & Song, Liang & Wachtel, Paul, 2014. "Institutional development and stock price synchronicity: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 92-108.
    3. repec:gam:jsusta:v:9:y:2017:i:11:p:2133-:d:119529 is not listed on IDEAS
    4. Lu, Jiangyong & Tao, Zhigang & Yang, Zhi, 2010. "The costs and benefits of government control: Evidence from China's collectively-owned enterprises," China Economic Review, Elsevier, vol. 21(2), pages 282-292, June.
    5. Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 74-90.
    6. Linda Yueh, 2010. "The Economy of China," Books, Edward Elgar Publishing, number 3705.
    7. Jiang, Zhan & Kim, Kenneth A., 2013. "Financial management in China," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 125-133.
    8. Boeing, Philipp, 2016. "The allocation and effectiveness of China’s R&D subsidies - Evidence from listed firms," Research Policy, Elsevier, vol. 45(9), pages 1774-1789.
    9. Du, Julan & Lu, Yi & Tao, Zhigang, 2009. "China as a regulatory state," BOFIT Discussion Papers 17/2009, Bank of Finland, Institute for Economies in Transition.
    10. Boeing, Philipp & Mueller, Elisabeth & Sandner, Philipp, 2016. "China's R&D explosion—Analyzing productivity effects across ownership types and over time," Research Policy, Elsevier, vol. 45(1), pages 159-176.
    11. Liu, Jianlei & Uchida, Konari & Gao, Ruidong, 2012. "Political connections and the long-term stock performance of Chinese IPOs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 814-833.
    12. Böing, Philipp & Müller, Elisabeth & Sandner, Philipp, 2013. "In-house R&D and External Knowledge Acquisition What Makes Chinese Firms Productive?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80037, Verein für Socialpolitik / German Economic Association.
    13. Böing, Philipp, 2014. "China's Technology Subsidies - Much ado about nothing?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100536, Verein für Socialpolitik / German Economic Association.
    14. Boeing, Philipp, 2014. "China's R&D subsidies: Allocation and effectiveness," ZEW Discussion Papers 14-103, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    15. Di Guo & Kun Jiang & Xiaoting Mai, 2015. "Venture Capital Investment and the Post-IPO Performance of Entrepreneurial Firms: Evidence from the People's Republic of China," Asian Development Review, MIT Press, vol. 32(1), pages 113-141, March.


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