Original Research
Are initial public offerings significant to firm performance in an emerging stock market? Evidence from China
Submitted: 22 December 2020 | Published: 01 December 2021
About the author(s)
Qian Gao, Economics School, Anhui University, Heifei, ChinaHai Long, International Economics School, Anhui International Studies University, Heifei, China
Jianzhi Zhao, School of International Relations and Public Affairs, Fudan University, Shanghai, China
Abstract
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.
Keywords
Metrics
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Crossref Citations
1. Why the Operating Performance of Post-IPO Firms Decreases: Evidence from China
Hai Long, Xiaochen Lin, Yu Chen
Journal of Risk and Financial Management vol: 14 issue: 9 first page: 424 year: 2021
doi: 10.3390/jrfm14090424