IDEAS home Printed from
   My bibliography  Save this article

Why Chinese listed companies frequently switch lead underwriters in seasoned equity offerings: A perspective of listed companies' loyalty


  • Liu Jianghui


Purpose - The purpose of this paper is to explore the reasons for the high-frequency switches of lead underwriters by Chinese listed companies in their seasoned equity offerings. It contributes to the literature by filling the gap and providing evidence that institutional and non-market factors could affect listed companies' decisions to switch their lead underwriters in the Chinese capital market. Design/methodology/approach - This paper employs a numerical measure of listed companies' loyalty to evaluate their frequency of switching lead underwriters, and employs a Findings - It is observed that the frequency of switching lead underwriters is very high among Chinese listed companies for their seasoned offerings. It is also found that underwriters' deficient reputation and the lack of industrial experience, together with the depreciation of relationship-specific assets, could have important impacts on lead underwriters being frequently switched in China. Besides, the frequent switches of lead underwriters could also be attributable to the non-market supervision and regulatory influences by Chinese authorities over the security underwriting market. Originality/value - This paper could help further the understanding of the factors that could explain the listed companies' frequent switches of their lead underwriters for their seasoned offerings in China. In addition, this paper has policy implications on how to improve the listed companies' loyalty for regulators in China. These implications could help improve the regulatory environment and promote the overall performance of the Chinese security underwriting market.

Suggested Citation

  • Liu Jianghui, 2011. "Why Chinese listed companies frequently switch lead underwriters in seasoned equity offerings: A perspective of listed companies' loyalty," China Finance Review International, Emerald Group Publishing, vol. 1(3), pages 280-312, July.
  • Handle: RePEc:eme:cfripp:v:1:y:2011:i:3:p:280-312

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

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

    References listed on IDEAS

    1. Ongena, Steven & Smith, David C., 2001. "The duration of bank relationships," Journal of Financial Economics, Elsevier, vol. 61(3), pages 449-475, September.
    2. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    3. Chitru S. Fernando & Vladimir A. Gatchev & Paul A. Spindt, 2005. "Wanna Dance? How Firms and Underwriters Choose Each Other," Journal of Finance, American Finance Association, vol. 60(5), pages 2437-2469, October.
    4. James Ang & Shaojun Zhang, 2006. "Underwriting relationships: Information production costs, underwriting fees, and first mover advantage," Review of Quantitative Finance and Accounting, Springer, vol. 27(2), pages 205-229, September.
    5. Carter, Richard B & Manaster, Steven, 1990. " Initial Public Offerings and Underwriter Reputation," Journal of Finance, American Finance Association, vol. 45(4), pages 1045-1067, September.
    6. Burch, Timothy R. & Nanda, Vikram & Warther, Vincent, 2005. "Does it pay to be loyal? An empirical analysis of underwriting relationships and fees," Journal of Financial Economics, Elsevier, vol. 77(3), pages 673-699, September.
    7. Dunbar, Craig G., 2000. "Factors affecting investment bank initial public offering market share," Journal of Financial Economics, Elsevier, vol. 55(1), pages 3-41, January.
    Full references (including those not matched with items on IDEAS)


    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:cfripp:v:1:y:2011:i:3:p:280-312. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.