Political Connections and the Long-Term Stock Performance of Chinese IPOs

Posted: 24 Nov 2010 Last revised: 28 Aug 2012

See all articles by Jianlei Liu

Jianlei Liu

Kyushu University

Konari Uchida

Kyushu University

Ruidong Gao

Waseda University

Date Written: August 27, 2012

Abstract

We analyze 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.

Keywords: initial public offerings, long-term underperformance, political connections, regulations, China

JEL Classification: G32, G34, G38

Suggested Citation

Liu, Jianlei and Uchida, Konari and Gao, Ruidong, Political Connections and the Long-Term Stock Performance of Chinese IPOs (August 27, 2012). Journal of International Financial Markets, Institutions and Money, Vol. 22, No. 4, 2012. Available at SSRN: https://ssrn.com/abstract=1714530 or http://dx.doi.org/10.2139/ssrn.1714530

Jianlei Liu

Kyushu University ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

Konari Uchida (Contact Author)

Kyushu University ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan
+81-92-642-2463 (Phone)

Ruidong Gao

Waseda University ( email )

1-6-1 Nishiwaseda Shinjuku-ku
Tokyo, 169-8050
Japan

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