Pyramid IPOs on the Chinese Growth Enterprise Market

Martin Holmén, Peng Wang

Forskningsoutput: TidskriftsbidragArtikelVetenskapligPeer review

2 Citeringar (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.
Referentgranskad vetenskaplig tidskriftEmerging Markets Finance and Trade
Sidor (från-till)160-173
Antal sidor14
StatusPublicerad - 2015
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift


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