Political connections and the long-term stock performance of Chinese IPOs

Jianlei Liu, Konari Uchida, Ruidong Gao

    Research output: Contribution to journalArticle

    26 Citations (Scopus)

    Abstract

    We analyse the long-term stock performance of Chinese initial public offerings (IPOs) between the years of 2000 and 2007. The results reveal that firms with political connections experience better long-term stock performance. Our results suggest that the abolition of the Issuance Quota System and Channel Restriction System has a negative influence on the long-term performance of IPOs. This evidence is consistent with the view that local government officials are likely to select politically connected companies to go public.

    Original languageEnglish
    Pages (from-to)814-833
    Number of pages20
    JournalJournal of International Financial Markets, Institutions and Money
    Volume22
    Issue number4
    DOIs
    Publication statusPublished - 2012

    Keywords

    • China
    • Initial public offerings
    • Long-term underperformance
    • Political connections
    • Regulations

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Finance

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