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Ownership structure, insider behavior, and IPO performance of SMEs in China

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  • S. Ramakrishna Velamuri

    (China Europe International Business School)

  • Wilson Liu

    (China Europe International Business School)

Abstract

This paper examines the drivers of IPO performance of 783 SMEs in China between 2009 and 2012 that were listed on the SME and Growth Enterprise Boards. The study finds that firms that had prior venture capital (VC) investment did not perform better than those that did not. Among VC-invested firms, ventures (1) with strong VC control rights relative to those of the largest block shareholder, (2) with former ownership affiliation between the VC and the underwriter, and (3) that paid higher IPO fees had a negative long-term performance. The negative relationship between VC-underwriter ownership affiliation and long-term performance decreases as the reputation of the underwriter increases.

Suggested Citation

  • S. Ramakrishna Velamuri & Wilson Liu, 2017. "Ownership structure, insider behavior, and IPO performance of SMEs in China," Small Business Economics, Springer, vol. 48(3), pages 771-793, March.
    • Handle: RePEc:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9797-7
    DOI: 10.1007/s11187-016-9797-7
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    5. Nischay Arora & Balwinder Singh, 2019. "Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 44(2), pages 193-208, May.
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