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The consequences of shifting the IPO offer pricing power from securities regulators to market participants in weak institutional environments: evidence from China

Chen, Jun, Ke, Bin, Wu, Donghui and Yang, Zhifeng 2016, The consequences of shifting the IPO offer pricing power from securities regulators to market participants in weak institutional environments: evidence from China, Journal of corporate finance, In Press, pp. 1-22, doi: 10.1016/j.jcorpfin.2016.10.007.

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Title The consequences of shifting the IPO offer pricing power from securities regulators to market participants in weak institutional environments: evidence from China
Author(s) Chen, Jun
Ke, Bin
Wu, Donghui
Yang, Zhifeng
Journal name Journal of corporate finance
Season In Press
Start page 1
End page 22
Total pages 22
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2016-06
ISSN 0929-1199
Keyword(s) IPO regulation
financial reporting quality
auditor choice
IPO offer pricing
Summary We examine the consequences of shifting the IPO offer pricing power from securities regulators to market participants in a representative weak investor protection country, China. We show IPO offer prices relative to reported earnings are less depressed when determined by market participants than by securities regulators. IPO firms are also less likely to select a low quality auditor or inflate the pre-IPO earnings when IPO offer prices are determined by market participants. However, we find no evidence that IPO offerings are more likely to be overpriced when offer prices are determined by market participants. Furthermore, IPO firms' financial reporting choices made at the time of the IPO have a long lasting impact on the firms' subsequent financial reporting quality. Overall, our results contribute to the ongoing debate on the appropriate roles of securities regulators versus market forces in protecting public investors in markets with weak institutional environments.
Language eng
DOI 10.1016/j.jcorpfin.2016.10.007
Field of Research 150103 Financial Accounting
1502 Banking, Finance And Investment
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30090853

Document type: Journal Article
Collection: Department of Accounting
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