The life cycle of initial public offering companies : a panel analysis of Chinese listed companies

Li, D

Abstract

Many prior studies have been devoted to the performance of Chinese listed companies over
the last 20 years, however they have largely neglected what influence the transition of the
post-IPO companies. This thesis reports on one of the first empirical attempts to investigate
what factors influence the post-issue transition of Chinese initial public offering (IPO)
companies into one of the post-IPO states over the life cycle of the company. These can be
represented by either healthy state, get acquired, or delisting outright. Also, a company has
strong (S-M&A) or weak performance (W-M&A) prior becoming acquisition target. Using
panel data from 1998 to 2008, this research constructs measures for a large number of factors
for all publicly listed companies on the Chinese stock market, particularly examines the
impact of agency costs, board characteristics and ultimate ownership.
With logistic regressions, this research shows that the probability of the W-M&A and
delisting states goes up as agency costs increase, which indicates that agency costs are
responsible for non-healthy post-IPO status. Of the board characteristics variables, higher
board independence exists in healthy companies compared to acquired and delisted
companies. This suggests that board independence is associated with the incidence of
transition to healthy post-IPO state. CEO duality and board size do not appear to be
significant determinants. Furthermore, state ultimate-controlled companies are more likely to
get into both M&A states, implying that the state ownership has become one of the most
important factor in determining the M&A transactions. However the state ultimate ownership
deters companies from delisting. The results display significant evidence that the ultimate
ownership is important for transition to the post-IPO states. Besides, this research points out
that high-technology, great pre-IPO operating performance, large IPO offering size and low
IPO initial returns are accountable for survival in the after-market.

Citation

Li, D. The life cycle of initial public offering companies : a panel analysis of Chinese listed companies. (Thesis). Salford : University of Salford

• Thesis Type: Thesis
• Deposit Date: Oct 3, 2012
• Award Date: Jan 1, 2010