Pyramid IPOs on the Chinese Growth Enterprise Market

Martin Holmén, Peng Wang

Research output: Contribution to journalArticleScientificpeer-review

4 Citations (Scopus)


In this article, we investigate initial public offerings (IPOs) of high-tech firms on the Chinese Growth Enterprise Market (GEM). Almost half of the GEM IPOs are set up in pyramid structures. The likelihood of a pyramid structure increases with the size of the IPO firm and state control. Our results do not suggest that pyramids are set up to overcome financial constraints. However, we document that pyramid IPOs are discounted before the IPO. The subscription price-to-book ratio is significantly lower for pyramid IPOs, and this translates into higher underpricing. We conclude that IPO investors demand a higher risk premium when investing in pyramid IPOs.
Original languageEnglish
Peer-reviewed scientific journalEmerging Markets Finance and Trade
Issue number1
Pages (from-to)160-173
Number of pages14
Publication statusPublished - 2015
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • growth enterprise market
  • initial public offering
  • oversubscription
  • pyramid ownership structure
  • underpricing


Dive into the research topics of 'Pyramid IPOs on the Chinese Growth Enterprise Market'. Together they form a unique fingerprint.

Cite this