Political connections and the process of going public : evidence from China

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Title: Political connections and the process of going public : evidence from China
Author: Francis, Bill B. ; Hasan, Iftekhar ; Sun, Xian
Organization: Suomen Pankki
Series: Bank of Finland Research Discussion Papers
Series number: 7/2009
Year of publication: 2009
Publication date: 1.3.2009
Published in: Published in Journal of International Money and Finance, Volume 28, Issue 4, June 2009: 696-719 and Journal of Banking Regulation 2006 ; 7 ; 3-4.
Pages: 48 s.
Keywords: politiikka; Kiina; osakkeet; yritykset; hinnoittelu; pörssit; vaikutukset; arvopaperimarkkinat; osakemarkkinat; IPO; listautuminen
Abstract: We examine how political connections impact the process of going public. Specifically, we test how political connections impact the pricing of newly offered shares, the magnitude of underpricing, and the fixed cost of going public. Based on experiences of the new public firms in the Chinese security markets and using multiple measures of political connections, we find robust evidence that issuing firms with political connections reap significant preferential benefits from going public. To be specific, we find that firms irrespective of ownership arrangements with greater political connections have higher offering prices, less underpricing, and lower fixed costs during the going-public process.
Rights: https://helda.helsinki.fi/bof/copyright

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