This paper empirically investigates the role of social trust in the long-term performance of the initial public offerings(IPOs)in China,controlling for the formal institutional environment.We find that privately owned...This paper empirically investigates the role of social trust in the long-term performance of the initial public offerings(IPOs)in China,controlling for the formal institutional environment.We find that privately owned or smaller IPO firms experience signifi-cantly better post-IPO performance when they are incorporated in regions with more social trust.The state-owned and bigger IPO firms,on the other hand,experience better long-term post-IPO performance when they are incorporated in regions with stronger formal institutions(e.g.court enforcement and contract holding).Political pluralism turns out to benefit all IPOs in the long term.In addition,our evidence shows that stronger social trust substitutes for the quality of court enforcement but complements the role of contract holding.These results are robust after controlling for alternative definitions of ownership,outliers,non-linear effects of institutions,and the potential endogeneity of institutions in the model.展开更多
文摘This paper empirically investigates the role of social trust in the long-term performance of the initial public offerings(IPOs)in China,controlling for the formal institutional environment.We find that privately owned or smaller IPO firms experience signifi-cantly better post-IPO performance when they are incorporated in regions with more social trust.The state-owned and bigger IPO firms,on the other hand,experience better long-term post-IPO performance when they are incorporated in regions with stronger formal institutions(e.g.court enforcement and contract holding).Political pluralism turns out to benefit all IPOs in the long term.In addition,our evidence shows that stronger social trust substitutes for the quality of court enforcement but complements the role of contract holding.These results are robust after controlling for alternative definitions of ownership,outliers,non-linear effects of institutions,and the potential endogeneity of institutions in the model.
