Pyramid IPOs on the Chinese Growth Enterprise Market

Martin Holmén; Peng Wang

doi:10.1080/1540496X.2015.1011526

Pyramid IPOs on the Chinese Growth Enterprise Market

Martin Holmén, Peng Wang

Finansiell ekonomi, Helsingfors

Forskningsoutput: Tidskriftsbidrag › Artikel › Vetenskaplig › Peer review

1 Citeringar (Scopus)

Sammanfattning

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.

Originalspråk	Engelska
Referentgranskad vetenskaplig tidskrift	Emerging Markets Finance and Trade
Volym	51
Utgåva	1
Sidor (från-till)	160-173
Antal sidor	14
ISSN	1540-496X
DOI	https://doi.org/10.1080/1540496X.2015.1011526
Status	Publicerad - 2015
MoE-publikationstyp	A1 Originalartikel i en vetenskaplig tidskrift

Nyckelord

512 Företagsekonomi

Åtkomst av dokument

10.1080/1540496X.2015.1011526

Holmen_Wang_2013_ssrnAccepterat manuskript, 238 KB

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