This study investigates the earnings performance of 418 initial public offerings （IPOs） listed on the stock exchange of Hong Kong. By analyzing several profitability measures of these 1PO companies from the third ye...This study investigates the earnings performance of 418 initial public offerings （IPOs） listed on the stock exchange of Hong Kong. By analyzing several profitability measures of these 1PO companies from the third year prior to listing up to the fifth year post-listing, it is found that IPO companies＇ operating performances as a whole peak in the year of listing or the year preceding the listing, but exhibit a fall in post-issue profitability with the decline being most pronounced in the first financial year following the year in which the listing take place. Over 30% of these IPOs suffer a loss three years after the offerings. Deterioration of post-issue performance is found to be more severe for smaller finns, highly-geared companies, fast-growing enterprises, companies with lower ownership retention by original shareholders, and companies which have managed earnings upwards at the time of listing. These observations are consistent with the higher agency costs when firms go public and that managers have timed the issue at the peak of the companies＇ long-run performance. Further investigation confirms that IPO companies in general make use of income-increasing accruals to manage their earnings upwards in the year when they go public. The reversal of the accruals in post-issue years further exaggerates the decline in their profitability.展开更多
The underpricing of initial public offerings （IPOs） is generally explained with asymmetric information and risk. We complement these traditional explanations with a new theory proposed by Ellul and Pagano （2006） w...The underpricing of initial public offerings （IPOs） is generally explained with asymmetric information and risk. We complement these traditional explanations with a new theory proposed by Ellul and Pagano （2006） where investors worry also about the after-market illiquidity that may result from asymmetric information after the IPO. The less liquid the after-market is expected to be, the larger will be the IPO underpricing. The samples are the 41 IPOs carried out between 2001-2005. The samples are 7 Shari＇ah-based firms and 34 non Shariah-based firms. Shariah-based firms are those included in Jakarta Islamic Index （JII）, at least one period （one semester）. Regression results show that the relationship between after-market liquidity and underpricing is insignificant unless we use trading frequency as proxy for liquidity for non Shariah-based firms.展开更多
This study empirically investigates the impact of managerial entrenchment on firm financial performance of Chinese firms initial public offerings （IPOs）. Using 142 firms listed in the Shenzhen Stock Exchange （SZSE...This study empirically investigates the impact of managerial entrenchment on firm financial performance of Chinese firms initial public offerings （IPOs）. Using 142 firms listed in the Shenzhen Stock Exchange （SZSE）, which was collected from the Guotaian Research Service Center （GTA-RSC） databases, this study uses two proxies to measure firm performance and three proxies to measure managerial entrenchment. The two proxies for firm performance are Tobins＇ Q and return on assets （ROA）, and the three proxies for managerial entrenchment are entrenchment 1, entrenchment 2, and entrenchment 3. These three entrenchment proxies are derived from the principal component analysis （PCA）. Though previous studies of managerial entrenchment and firm performance variables suffer from endogeneity, with respect to the corporate governance it is unclear as to which variables are endogenous and which are exogenous. This study confirms that the data are linear and no endogeneity issue should be address in this study, but only heteroskedasticity, non-normality for Tobins＇ Q are a problem, therefore, the regression method employed for Tobins＇ Q is the generalised least square （GLS） and the ordinary least square （OLS） between estimators for ROA. The regression result for Tobins＇ Q reveals that managerial entrenchment is negatively impact on firm performance. The results are in contradiction to the stewardship theory for new firms whereas the managerial entrenchment for new firms is positive. Furthermore, only one entrenchment proxy yields a significant coefficient. In conclusion, the negative results of entrenchment proxies were caused by the different institutional structures and legal systems which are the Chinese corporations that are still largely owned and controlled by a state and hence the centralised state controlled was responsible for all managerial actions.展开更多
We use the Chinese initial public offering data from October 2009 to August 2010 to examine the newly-established growth enterprise board （GEB）. The results indicate that the GEB has been successful and is providing...We use the Chinese initial public offering data from October 2009 to August 2010 to examine the newly-established growth enterprise board （GEB）. The results indicate that the GEB has been successful and is providing a viable channel for new small and medium-sized firms to raise external capital. Four variables, the volatility variable, the turnover ratio, the winning lottery ratio and the price-earnings ratio, are important factors driving the initial- day returns in the regression analysis. The implementation of the new trading-halts policy on the GEB is found to be effective in mitigating excessive speculation. Our analysis results could be used by policy-makers to gauge the effects of policy changes on the underpricing of the initial public offerings of the GEB.展开更多
Previous empirical evidence on the liquidity effect to the lockup expiration is mixed. A sample from Chinese listed firms is adopted and contributes to better understand this effect in emerging markets. The spread and...Previous empirical evidence on the liquidity effect to the lockup expiration is mixed. A sample from Chinese listed firms is adopted and contributes to better understand this effect in emerging markets. The spread and illiquidity significantly increases around lockup expiration in China. Furthermore, the liquidity reaction to firms' disclosure quality is explicitly related. The results confirm that higher disclosure quality is significantly associated with lower abnormal spread and illiquidity impact. The effect of lockup expiration shares on liquidity proxies differs in firm disclosure quality. Identifying the factors affecting liquidity around such events may help regulators develop policies to provide investors with greater confidence in their investments.展开更多
文摘This study investigates the earnings performance of 418 initial public offerings （IPOs） listed on the stock exchange of Hong Kong. By analyzing several profitability measures of these 1PO companies from the third year prior to listing up to the fifth year post-listing, it is found that IPO companies＇ operating performances as a whole peak in the year of listing or the year preceding the listing, but exhibit a fall in post-issue profitability with the decline being most pronounced in the first financial year following the year in which the listing take place. Over 30% of these IPOs suffer a loss three years after the offerings. Deterioration of post-issue performance is found to be more severe for smaller finns, highly-geared companies, fast-growing enterprises, companies with lower ownership retention by original shareholders, and companies which have managed earnings upwards at the time of listing. These observations are consistent with the higher agency costs when firms go public and that managers have timed the issue at the peak of the companies＇ long-run performance. Further investigation confirms that IPO companies in general make use of income-increasing accruals to manage their earnings upwards in the year when they go public. The reversal of the accruals in post-issue years further exaggerates the decline in their profitability.
文摘The underpricing of initial public offerings （IPOs） is generally explained with asymmetric information and risk. We complement these traditional explanations with a new theory proposed by Ellul and Pagano （2006） where investors worry also about the after-market illiquidity that may result from asymmetric information after the IPO. The less liquid the after-market is expected to be, the larger will be the IPO underpricing. The samples are the 41 IPOs carried out between 2001-2005. The samples are 7 Shari＇ah-based firms and 34 non Shariah-based firms. Shariah-based firms are those included in Jakarta Islamic Index （JII）, at least one period （one semester）. Regression results show that the relationship between after-market liquidity and underpricing is insignificant unless we use trading frequency as proxy for liquidity for non Shariah-based firms.
文摘This study empirically investigates the impact of managerial entrenchment on firm financial performance of Chinese firms initial public offerings （IPOs）. Using 142 firms listed in the Shenzhen Stock Exchange （SZSE）, which was collected from the Guotaian Research Service Center （GTA-RSC） databases, this study uses two proxies to measure firm performance and three proxies to measure managerial entrenchment. The two proxies for firm performance are Tobins＇ Q and return on assets （ROA）, and the three proxies for managerial entrenchment are entrenchment 1, entrenchment 2, and entrenchment 3. These three entrenchment proxies are derived from the principal component analysis （PCA）. Though previous studies of managerial entrenchment and firm performance variables suffer from endogeneity, with respect to the corporate governance it is unclear as to which variables are endogenous and which are exogenous. This study confirms that the data are linear and no endogeneity issue should be address in this study, but only heteroskedasticity, non-normality for Tobins＇ Q are a problem, therefore, the regression method employed for Tobins＇ Q is the generalised least square （GLS） and the ordinary least square （OLS） between estimators for ROA. The regression result for Tobins＇ Q reveals that managerial entrenchment is negatively impact on firm performance. The results are in contradiction to the stewardship theory for new firms whereas the managerial entrenchment for new firms is positive. Furthermore, only one entrenchment proxy yields a significant coefficient. In conclusion, the negative results of entrenchment proxies were caused by the different institutional structures and legal systems which are the Chinese corporations that are still largely owned and controlled by a state and hence the centralised state controlled was responsible for all managerial actions.
基金the Social Science and Humanity Research Fund of the Chinese Ministry of Education(10YJC790070)the National Natural Science Foundation of China(71031003)
文摘We use the Chinese initial public offering data from October 2009 to August 2010 to examine the newly-established growth enterprise board （GEB）. The results indicate that the GEB has been successful and is providing a viable channel for new small and medium-sized firms to raise external capital. Four variables, the volatility variable, the turnover ratio, the winning lottery ratio and the price-earnings ratio, are important factors driving the initial- day returns in the regression analysis. The implementation of the new trading-halts policy on the GEB is found to be effective in mitigating excessive speculation. Our analysis results could be used by policy-makers to gauge the effects of policy changes on the underpricing of the initial public offerings of the GEB.
基金the China Postdoctoral Science Foundation(No.2015M571546)the National Natural Science Foundation of China(No.73120107002)
文摘Previous empirical evidence on the liquidity effect to the lockup expiration is mixed. A sample from Chinese listed firms is adopted and contributes to better understand this effect in emerging markets. The spread and illiquidity significantly increases around lockup expiration in China. Furthermore, the liquidity reaction to firms' disclosure quality is explicitly related. The results confirm that higher disclosure quality is significantly associated with lower abnormal spread and illiquidity impact. The effect of lockup expiration shares on liquidity proxies differs in firm disclosure quality. Identifying the factors affecting liquidity around such events may help regulators develop policies to provide investors with greater confidence in their investments.
