Disproportionate ownership structure and IPO long-run performance of non-SOEs in China

Xiaoming Wang; Jerry Cao; Qigui Liu; Jinghua Tang; Gary Gang Tian

doi:10.1016/j.chieco.2014.11.004

Disproportionate ownership structure and IPO long-run performance of non-SOEs in China

Xiaoming Wang, Jerry Cao, Qigui Liu, Jinghua Tang, Gary Gang Tian^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

11 Citations (Scopus)

Abstract

This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.

Original language	English
Pages (from-to)	27-42
Number of pages	16
Journal	China Economic Review
Volume	32
DOIs	https://doi.org/10.1016/j.chieco.2014.11.004
Publication status	Published - 1 Feb 2015
Externally published	Yes

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title = "Disproportionate ownership structure and IPO long-run performance of non-SOEs in China",

abstract = "This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.",

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AU - Liu, Qigui

AU - Tang, Jinghua

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AB - This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.

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JO - China Economic Review

JF - China Economic Review

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Disproportionate ownership structure and IPO long-run performance of non-SOEs in China

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