The contingent value of CEO political connections: A study on IPO performance in China
This study investigates the effect of corporate political connections on IPO performance in an emerging economy. More specifically, it examines how CEO political connections affect the IPO performance of 428 firms in China from 2000 to 2004. The empirical results show that CEO political connections have a positive impact on firms’ ability to raise capital from public markets. The results also show that CEO political connections with the central government play a more important role in IPO performance than political connections with regional governments. In addition, the positive effect of central political connections on IPO performance is weaker in market-restricted regions but stronger in highly regulated industries. The findings highlight the contingent value of CEO political connections in an emerging economy. Copyright Springer Science+Business Media, LLC 2013
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 30 (2013)
Issue (Month): 4 (December)
|Contact details of provider:|| Postal: |
Web page: http://www.springerlink.com/link.asp?id=106589
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ghemawat, Pankaj & Khanna, Tarun, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 35-61, March.
- Sonia M. L. Wong & Sonja Opper & Ruyin Hu, 2004. "Shareholding structure, depoliticization and firm performance," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 29-66, 03.
- Alwyn Young, 2000. "The Razor's Edge: Distortions and Incremental Reform in the People's Republic of China," NBER Working Papers 7828, National Bureau of Economic Research, Inc.
- Milgrom, Paul & Roberts, John, 1986.
"Price and Advertising Signals of Product Quality,"
Journal of Political Economy,
University of Chicago Press, vol. 94(4), pages 796-821, August.
- Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
- Amy J. Hillman, 2000. "The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change," Journal of Management Studies, Wiley Blackwell, vol. 37(2), pages 235-256, 03.
- Marco Pagano & Fabio Panetta & Luigi Zingales, .
"Why Do Companies Go Public? An Empirical Analysis,"
CRSP working papers
330, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Marco Pagano & Fabio Panetta & Luigi Zingales, 1995. "Why Do Companies Go Public? An Empirical Analysis," NBER Working Papers 5367, National Bureau of Economic Research, Inc.
- Pagano, Marco & Panetta, Fabio & Zingales, Luigi, 1996. "Why Do Companies Go Public? An Empirical Analysis," CEPR Discussion Papers 1332, C.E.P.R. Discussion Papers.
- Kim, Moonchul & Ritter, Jay R., 1999. "Valuing IPOs," Journal of Financial Economics, Elsevier, vol. 53(3), pages 409-437, September.
- Yadong Luo, 2001. "Determinants of Entry in an Emerging Economy: A Multilevel Approach," Journal of Management Studies, Wiley Blackwell, vol. 38(3), pages 443-472, 05.
- McBain, Michael L. & Krause, David S., 1989. "Going public: The impact of insiders' holdings on the price of initial public offerings," Journal of Business Venturing, Elsevier, vol. 4(6), pages 419-428, November.
- Hal Hill, 2002. "Spatial Disparities in Developing East Asia: a survey," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 16(1), pages 10-35, 05.
- Nee, Victor & Cao, Yang, 2005. "Market Transition and the Firm: Institutional Change and Income Inequality in Urban China," Management and Organization Review, Cambridge University Press, vol. 1(01), pages 23-56, March.
- Kock, Carl J & Guillen, Mauro F, 2001. "Strategy and Structure in Developing Countries: Business Groups as an Evolutionary Response to Opportunities for Unrelated Diversification," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 77-113, March.
- Hellman, Joel S. & Jones, Geraint & Kaufmann, Daniel, 2003. "Seize the state, seize the day: state capture and influence in transition economies," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 751-773, December.
- Loughran, Tim & Ritter, Jay R. & Rydqvist, Kristian, 1994.
"Initial public offerings: International insights,"
Pacific-Basin Finance Journal,
Elsevier, vol. 2(2-3), pages 165-199, May.
- Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1371-1411, November.
- Alwyn Young, 2000. "The Razor'S Edge: Distortions And Incremental Reform In The People'S Republic Of China," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1091-1135, November.
- Francis, Bill B. & Hasan, Iftekhar & Sun, Xian, 2009.
"Political connections and the process of going public: Evidence from China,"
Journal of International Money and Finance,
Elsevier, vol. 28(4), pages 696-719, June.
- Francis , Bill B & Hasan, Iftekhar & Sun, Xian, 2009. "Political connections and the process of going public: evidence from China," Research Discussion Papers 7/2009, Bank of Finland.
- Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November.
- Richard B. Carter & Frederick H. Dark & Ajai K. Singh, 1998. "Underwriter Reputation, Initial Returns, and the Long-Run Performance of IPO Stocks," Journal of Finance, American Finance Association, vol. 53(1), pages 285-311, 02.
- Coate, Malcolm B & Higgins, Richard S & McChesney, Fred S, 1990. "Bureaucracy and Politics in FTC Merger Challenges," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 463-82, October.
- Claessens, Stijn & Feijen, Erik & Laeven, Luc, 2007.
"Political Connections and Preferential Access to Finance: The Role of Campaign Contributions,"
CEPR Discussion Papers
6045, C.E.P.R. Discussion Papers.
- Claessens, Stijn & Feijen, Erik & Laeven, Luc, 2008. "Political connections and preferential access to finance: The role of campaign contributions," Journal of Financial Economics, Elsevier, vol. 88(3), pages 554-580, June.
- Megginson, William L & Weiss, Kathleen A, 1991. " Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July.
- Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 187-212.
- Fried, Vance H. & Bruton, Garry D. & Hisrich, Robert D., 1998. "Strategy and the board of directors in venture capital-backed firms," Journal of Business Venturing, Elsevier, vol. 13(6), pages 493-503, November.
- Paul H. Malatesta & Kathryn L. DeWenter, 2001. "State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity," American Economic Review, American Economic Association, vol. 91(1), pages 320-334, March.
- Chan, Kalok & Wang, Junbo & Wei, K. C. John, 2004. "Underpricing and long-term performance of IPOs in China," Journal of Corporate Finance, Elsevier, vol. 10(3), pages 409-430, June.
- Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
- MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
- Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
- Mara Faccio, 2010. "Differences between Politically Connected and Nonconnected Firms: A Cross-Country Analysis," Financial Management, Financial Management Association International, vol. 39(3), pages 905-928, 09.
- James C. Brau & Stanley E. Fawcett, 2006. "Initial Public Offerings: An Analysis of Theory and Practice," Journal of Finance, American Finance Association, vol. 61(1), pages 399-436, 02.
- Daphne Yiu & Yuan Lu, 2005. "Understanding Business Group Performance in an Emerging Economy: Acquiring Resources and Capabilities in Order to Prosper," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 183-206, 01.
When requesting a correction, please mention this item's handle: RePEc:kap:asiapa:v:30:y:2013:i:4:p:1087-1114. 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: (Sonal Shukla)or (Christopher F. Baum)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.