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Related party transactions, expropriation and post-ipo performance – chinese evidence.
| Content Provider | CiteSeerX |
|---|---|
| Author | Cheng, Peng Chen, Jean |
| Abstract | This study provides evidence that Chinese IPOs (Initial Public Offerings) report a sharp decline in the post-IPO operating performance relative to the pre-IPO level. We find that related party transactions (RPTs) with controlling shareholders have significant effects on IPO operating performance. We divide RPTs into two types: loan RPTs and operating RPTs (i.e. non-loan RPTs). Our findings show that the pre-IPO industry-adjusted operating performance is positively associated with the size of contemporaneous operating RPTs at the same year; moreover, controlling shareholders barely borrow funds from their IPO subsidiaries in the pre-IPO year. However, in the post-IPO period, the positive relation between IPO operating performance and contemporaneous operating RPTs (with controlling shareholders) fades away. Importantly, controlling shareholders begin to expropriate IPO subsidiaries by obtaining a large amount of cash loans with preferential terms, which is negatively associated with post-IPO industry-adjusted operating performance of listed subsidiaries. We argue that controlling shareholders structure a large percentage of operating RPTs to |
| File Format | |
| Access Restriction | Open |
| Subject Keyword | Related Party Transaction Post-ipo Performance Chinese Evidence Ipo Subsidiary Non-loan Rpts Post-ipo Industry-adjusted Operating Performance Large Percentage Pre-ipo Industry-adjusted Operating Performance Post-ipo Period Significant Effect Positive Relation Chinese Ipo Post-ipo Operating Performance Relative Contemporaneous Operating Rpts Listed Subsidiary Operating Rpts Loan Rpts Sharp Decline Cash Loan Pre-ipo Level Initial Public Offering Pre-ipo Year Shareholder Structure Large Amount Preferential Term |
| Content Type | Text |
