Ownership structure, insider behavior, and IPO performance of SMEs in China
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This paper examines the drivers of IPO performance of 783 SMEs in China between 2009 and 2012 that were listed on the SME and Growth Enterprise Boards. The study finds that firms that had prior venture capital (VC) investment did not perform better than those that did not. Among VC-invested firms, ventures (1) with strong VC control rights relative to those of the largest block shareholder, (2) with former ownership affiliation between the VC and the underwriter, and (3) that paid higher IPO fees had a negative long-term performance. The negative relationship between VC-underwriter ownership affiliation and long-term performance decreases as the reputation of the underwriter increases.
KeywordsVenture capital IPO IPO performance Transition economies Ownership structure Insider behavior
JEL ClassificationsG12 P2 G3
We gratefully acknowledge the helpful comments and suggestions on earlier versions of this manuscript from the participants of the brown bag seminar at CEIBS, the research seminar participants at the Peking-HSBC Business School, Yan Gao and G. Sabarinathan. We thank Luke Keele and Malathi Velamuri for helpful feedback on the econometric models. We thank Herman Mulyana and Tracy Zhang for their valuable assistance with data preparation. Finally, we thank Associate Editor Julie Ann Elston and anonymous reviewers for their helpful comments and suggestions on earlier drafts of this manuscript.
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