Disproportionate ownership structure and IPO long-run performance of non-SOEs in China

Authors

Xiaoming Wang, Shanghai University of Finance And Economics
Jerry Cao, Singapore Management University
Qigui Liu, University of WollongongFollow
Jinghua Tang, University of WollongongFollow
Gary Tian, University of WollongongFollow

RIS ID

95935

Publication Details

Wang, X., Cao, J., Liu, Q., Tang, J. & Tian, G. Gang. (2015). Disproportionate ownership structure and IPO long-run performance of non-SOEs in China. China Economic Review (Amsterdam), 32 27-42.

Abstract

This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.