Political connection of financial intermediaries: Evidence from China's IPO market

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• 作者：Donghua Chen^a ; ^{dhchen@nju.edu.cn} ; Yuyan Guan^b ; ¹ ; ^{yyguan@cityu.edu.hk} ; Tianyu Zhang^c ; ² ; ^{tyzhang@cuhk.edu.hk} ; Gang Zhao^d ; ^{zhao.gang@mail.shufe.edu.cn}
• 关键词：Political connection ; Underwriters ; IPO ; Post-IPO underperformance ; Underpricing
• 刊名：Journal of Banking & Finance
• 出版年：2017
• 出版时间：March 2017
• 年：2017
• 卷：76
• 期：Complete
• 页码：15-31
• 全文大小：632 K
• 卷排序：76

文摘

Using a sample of Chinese Initial Public Offerings (IPOs) from 2006 to 2011, we document that politically connected (PC) underwriters increase the likelihood of clients’ IPO applications being approved by the Chinese Securities Regulatory Commission (CSRC). We further show that PC underwriters charge premium underwriting fees. Consistent with the rent-seeking argument, we find that minority shareholders’ interests may be impaired as indicated by post-IPO underperformance. We do not detect significant differences in the underpricing of IPO deals underwritten by PC versus non-PC investment banks.