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The economic benefits of returned-global Chinese IPOs

Author

Listed:
  • Jerry W. Chen

    (The University of Auckland)

  • In-Mu Haw

    (Texas Christian University)

  • Jianfu Shen

    (The Hong Kong Polytechnic University)

  • Pauline W. Wong

    (The Hang Seng University of Hong Kong)

Abstract

On June 6, 2018, China has adopted a new policy that allows overseas-listed Chinese companies to launch secondary listings (hereafter, returned-global Chinese IPOs) in the domestic market. This study examines how the returned-global Chinese IPOs affect financial reporting quality, information environments, and IPO pricing in the domestic market. We find that these newly public companies in China exhibit lower discretionary accruals (and their components), lower stock price synchronicity, and lower first-day underpricing upon IPOs. Our difference-in-differences tests reveal that IFRS convergence in China mitigates overseas listing advantage of the returned-global firms. Overall, this study highlights the economic benefits of overseas listing of the returned-global Chinese IPOs and the impact of the change in financial accounting standards on the IPO market. Our evidence highlights the bright side of the recent regulatory change in China.

Suggested Citation

  • Jerry W. Chen & In-Mu Haw & Jianfu Shen & Pauline W. Wong, 2020. "The economic benefits of returned-global Chinese IPOs," Review of Quantitative Finance and Accounting, Springer, vol. 55(4), pages 1207-1239, November.
    • Handle: RePEc:kap:rqfnac:v:55:y:2020:i:4:d:10.1007_s11156-020-00873-1
    DOI: 10.1007/s11156-020-00873-1
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    More about this item

    Keywords

    Initial public offerings; Globalization; Earnings quality; Stock price synchronicity; IPO underpricing; IFRS; An emerging market;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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