The pricing and performance of IPOs in China’s poor counties
In the context of China’s drive to alleviate poverty, we focus on the initial public offering (IPO) firms located in China’s poor counties and investigate their IPO pricing and post-IPO performance. Contrary to the findings reported for the U.S., we find that the problem of information asymmetry bet...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Elsevier
2021-12-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309121000472 |
| _version_ | 1818459398873284608 |
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| author | Chao Yan Jiaxin Wang |
| author_facet | Chao Yan Jiaxin Wang |
| author_sort | Chao Yan |
| collection | DOAJ |
| description | In the context of China’s drive to alleviate poverty, we focus on the initial public offering (IPO) firms located in China’s poor counties and investigate their IPO pricing and post-IPO performance. Contrary to the findings reported for the U.S., we find that the problem of information asymmetry between Chinese firms located in rural areas and their investors is so severe that these IPO firms are associated with significantly higher underpricing. This effect is more pronounced for firms located in rural areas with poor traffic systems. We do not find significant market performance differences between rural and urban firms after their IPOs, but the operating performance of rural firms improves in the short term. Our additional analyses indicate that rural IPO firms have significantly lower investor attention and higher agency costs than urban firms. Overall, we enrich the literature on IPO pricing and the economic effects of geographic location. |
| first_indexed | 2024-12-14T23:13:44Z |
| format | Article |
| id | doaj.art-5390626148aa464db193139a44f761be |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-12-14T23:13:44Z |
| publishDate | 2021-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-5390626148aa464db193139a44f761be2022-12-21T22:44:07ZengElsevierChina Journal of Accounting Research1755-30912021-12-01144100205The pricing and performance of IPOs in China’s poor countiesChao Yan0Jiaxin Wang1Corresponding author at: School of Accounting, Zhongnan University of Economics and Law, 182# Nanhu Avenue, East Lake High-tech Development Zone, Wuhan 430073, China.; School of Accounting, Zhongnan University of Economics and Law, ChinaSchool of Accounting, Zhongnan University of Economics and Law, ChinaIn the context of China’s drive to alleviate poverty, we focus on the initial public offering (IPO) firms located in China’s poor counties and investigate their IPO pricing and post-IPO performance. Contrary to the findings reported for the U.S., we find that the problem of information asymmetry between Chinese firms located in rural areas and their investors is so severe that these IPO firms are associated with significantly higher underpricing. This effect is more pronounced for firms located in rural areas with poor traffic systems. We do not find significant market performance differences between rural and urban firms after their IPOs, but the operating performance of rural firms improves in the short term. Our additional analyses indicate that rural IPO firms have significantly lower investor attention and higher agency costs than urban firms. Overall, we enrich the literature on IPO pricing and the economic effects of geographic location.http://www.sciencedirect.com/science/article/pii/S1755309121000472Poor countiesIPO pricingPerformanceInformation asymmetry |
| spellingShingle | Chao Yan Jiaxin Wang The pricing and performance of IPOs in China’s poor counties China Journal of Accounting Research Poor counties IPO pricing Performance Information asymmetry |
| title | The pricing and performance of IPOs in China’s poor counties |
| title_full | The pricing and performance of IPOs in China’s poor counties |
| title_fullStr | The pricing and performance of IPOs in China’s poor counties |
| title_full_unstemmed | The pricing and performance of IPOs in China’s poor counties |
| title_short | The pricing and performance of IPOs in China’s poor counties |
| title_sort | pricing and performance of ipos in china s poor counties |
| topic | Poor counties IPO pricing Performance Information asymmetry |
| url | http://www.sciencedirect.com/science/article/pii/S1755309121000472 |
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