State ownership and IPO valuation: A signaling perspective on the transition economy of China

William P. Wan; Daphne W. Yiu; Xiaodan Abby Wang

State ownership and IPO valuation: A signaling perspective on the transition economy of China

William P. Wan, Daphne W. Yiu, Xiaodan Abby Wang

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

Abstract

This study examines the relationship between state ownership and IPO valuation in transition economies. Because the state often retains significant ownership after an IPO, which negatively impacts IPO valuation, we argue from signaling theory that the government may strategically allocate shares to different types of institutional investors to convey positive signals such that IPO valuation can be improved. We contend that share allocation to various types of institutional investors signals different information to public investors in transition economies, and hence moderating the relationship between state ownership and IPO valuation differently. Using a sample of 499 IPOs between 1999 and 2004 in China, we found that state ownership is negatively related to IPO valuation; however, such relationship is moderated by shares allocation to strategic investors, investment funds, and legal persons.

Original language	English
Title of host publication	Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010
Publication status	Published - 2010
Externally published	Yes
Event	70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010 - Montreal, QC, Canada Duration: 6 Aug 2010 → 10 Aug 2010

Conference

Conference	70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010
Place	Canada
City	Montreal, QC
Period	6/08/10 → 10/08/10

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure

Research Keywords

Institutional investors
IPO
State ownership

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title = "State ownership and IPO valuation: A signaling perspective on the transition economy of China",

abstract = "This study examines the relationship between state ownership and IPO valuation in transition economies. Because the state often retains significant ownership after an IPO, which negatively impacts IPO valuation, we argue from signaling theory that the government may strategically allocate shares to different types of institutional investors to convey positive signals such that IPO valuation can be improved. We contend that share allocation to various types of institutional investors signals different information to public investors in transition economies, and hence moderating the relationship between state ownership and IPO valuation differently. Using a sample of 499 IPOs between 1999 and 2004 in China, we found that state ownership is negatively related to IPO valuation; however, such relationship is moderated by shares allocation to strategic investors, investment funds, and legal persons.",

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author = "Wan, {William P.} and Yiu, {Daphne W.} and Wang, {Xiaodan Abby}",

year = "2010",

language = "English",

booktitle = "Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010",

note = "70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010 ; Conference date: 06-08-2010 Through 10-08-2010",

}

Wan, WP, Yiu, DW & Wang, XA 2010, State ownership and IPO valuation: A signaling perspective on the transition economy of China. in Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010. 70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010, Montreal, QC, Canada, 6/08/10.

State ownership and IPO valuation: A signaling perspective on the transition economy of China. / Wan, William P.; Yiu, Daphne W.; Wang, Xiaodan Abby.
Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010. 2010.

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

TY - GEN

T1 - State ownership and IPO valuation

T2 - 70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010

AU - Wan, William P.

AU - Yiu, Daphne W.

AU - Wang, Xiaodan Abby

PY - 2010

Y1 - 2010

N2 - This study examines the relationship between state ownership and IPO valuation in transition economies. Because the state often retains significant ownership after an IPO, which negatively impacts IPO valuation, we argue from signaling theory that the government may strategically allocate shares to different types of institutional investors to convey positive signals such that IPO valuation can be improved. We contend that share allocation to various types of institutional investors signals different information to public investors in transition economies, and hence moderating the relationship between state ownership and IPO valuation differently. Using a sample of 499 IPOs between 1999 and 2004 in China, we found that state ownership is negatively related to IPO valuation; however, such relationship is moderated by shares allocation to strategic investors, investment funds, and legal persons.

AB - This study examines the relationship between state ownership and IPO valuation in transition economies. Because the state often retains significant ownership after an IPO, which negatively impacts IPO valuation, we argue from signaling theory that the government may strategically allocate shares to different types of institutional investors to convey positive signals such that IPO valuation can be improved. We contend that share allocation to various types of institutional investors signals different information to public investors in transition economies, and hence moderating the relationship between state ownership and IPO valuation differently. Using a sample of 499 IPOs between 1999 and 2004 in China, we found that state ownership is negatively related to IPO valuation; however, such relationship is moderated by shares allocation to strategic investors, investment funds, and legal persons.

KW - Institutional investors

KW - IPO

KW - State ownership

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UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-84863359219&origin=recordpage

M3 - RGC 32 - Refereed conference paper (with host publication)

BT - Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010

Y2 - 6 August 2010 through 10 August 2010

ER -

State ownership and IPO valuation: A signaling perspective on the transition economy of China

Abstract

Conference

UN SDGs

Research Keywords

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