Abstract

http://ssrn.com/abstract=2206871
 
 

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The Differential Impact of the Bank-Firm Relationship on IPO Underpricing: Evidence from China


Xiangchao Hao


Nankai University - School of Economics

Jing Shi


RMIT University - School of Economics, Finance and Marketing; Financial Research Network (FIRN)

Jian Yang


University of Colorado at Denver - Business School

January 25, 2013

Asian Finance Association (AsFA) 2013 Conference

Abstract:     
This study investigates the impact of the bank-firm relationship on IPO underpricing in China, an emerging economy with a bank-dominated financial system. With loan data from 902 IPO firms from 2004 to 2011, we document that the bank-firm relationship reduces the degree of IPO underpricing. Both the lender’s and the borrower’s firm characteristics affect the signal quality of the bank-firm relationship, resulting in differential impacts on IPO underpricing. The relationship between firms and banks with high credit quality or the relationship between firms without political connections and banks has a more positive impact on IPO underpricing.

Number of Pages in PDF File: 40

Keywords: bank-firm relationship, bank’s credit quality, political connections, initial public offerings, commercial banks

JEL Classification: G12, G21

working papers series


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Date posted: January 26, 2013 ; Last revised: October 26, 2013

Suggested Citation

Hao, Xiangchao and Shi, Jing and Yang, Jian, The Differential Impact of the Bank-Firm Relationship on IPO Underpricing: Evidence from China (January 25, 2013). Asian Finance Association (AsFA) 2013 Conference. Available at SSRN: http://ssrn.com/abstract=2206871 or http://dx.doi.org/10.2139/ssrn.2206871

Contact Information

Xiangchao Hao
Nankai University - School of Economics ( email )
Wenjin Road
Tianjin
China
Jing Shi
RMIT University - School of Economics, Finance and Marketing ( email )
Building 80
445 Swanston Street
Melbourne VIC, Melbourne 3000
Australia
Financial Research Network (FIRN) ( email )
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Jian Yang (Contact Author)
University of Colorado at Denver - Business School ( email )
1250 14th St.
Denver, CO 80204
United States
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