Original Research

Are initial public offerings significant to firm performance in an emerging stock market? Evidence from China

Qian Gao, Hai Long, Jianzhi Zhao
South African Journal of Business Management | Vol 52, No 1 | a2517 | DOI: https://doi.org/10.4102/sajbm.v52i1.2517 | © 2021 Qian Gao, Hai Long, Jianzhi Zhao | This work is licensed under CC Attribution 4.0
Submitted: 22 December 2020 | Published: 01 December 2021

About the author(s)

Qian Gao, Economics School, Anhui University, Heifei, China
Hai Long, International Economics School, Anhui International Studies University, Heifei, China
Jianzhi Zhao, School of International Relations and Public Affairs, Fudan University, Shanghai, China

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urpose:This study investigates firm performance after going public and explores whether Initial Public Offerings (IPOs) contribute to it.

Design/methodology/approach: This study employs comprehensive regression models to examine IPO significance to both operating performance and market performance.

Findings/results: It suggests that IPO firms retain their growth over the first 3 years after going public, but the growth does not sustain after the third year in terms of profit-related indicators, which is distinguishing from prior research. IPOs may contribute to firms’ market performance only, they are insignificant to firms’ operating performance in general, whilst industry-adjusted evidence suggests that IPOs are negatively associated with operating performance in terms of return on assets, return on sales and debt to assets.

Practical implications: The practical implication for managers is to spend more IPO capitals on business operations to maximise firm value.

Originality/value: Market value is taken into account, whilst operating performance is considered only by prior research, and it presents some different findings from prior studies based on developed stock markets.


IPOs; firm performance; post-IPO performance; emerging stock markets; Chinese entrepreneurship


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