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postgraduate thesis: Do regulatory frameworks affect the choice of IPO location and post-IPO performance of Chinese real estate firms?

TitleDo regulatory frameworks affect the choice of IPO location and post-IPO performance of Chinese real estate firms?
Authors
Advisors
Advisor(s):Wong, SKChau, KW
Issue Date2011
PublisherThe University of Hong Kong (Pokfulam, Hong Kong)
Citation
Wei, Q. [韦茜]. (2011). Do regulatory frameworks affect the choice of IPO location and post-IPO performance of Chinese real estate firms?. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b4729765
AbstractIn recent years, the number of Chinese companies going public has grown significantly. Some of these companies have listed their shares locally in Shanghai and Shenzhen, while others have chosen a stock exchange with better access to international capital (e.g., Hong Kong). This thesis examines 1) the determinants of the firms’ choice regarding initial public offering (IPO) locations and 2) whether IPO locations might affect their subsequent performance. Our study focuses solely on firms in the real estate sector in which pre-IPO attributes as well as the underlying asset value can be identified and measured. Our dataset includes 29 Chinese real estate firms that have issued shares in Shanghai or Shenzhen and 28 Chinese firms with IPOs in Hong Kong during the period of 1992-2008. To explain their IPO location choice, the self-selection or signaling theory suggests that firms with higher quality would signal this information by issuing shares in Hong Kong. Given the more stringent listing requirements and better informational disclosure schemes in the Hong Kong market, if a firm has low quality, such information is more likely and quickly to be discovered in Hong Kong than in Mainland China. Therefore, it is costly for such firms to imitate good firms’ IPO location choice. Once the firms have been listed, the corporate governance literature suggests that firms listed in Hong Kong would demonstrate a greater performance increase than those listed in Mainland China, because Hong Kong has a mature system of information disclosure, analyst coverage, and law enforcement. We found that firms listed in Hong Kong achieved higher Return on Asset (ROA) than those listed in Mainland China. We then construct four proxies for firms’ unobserved quality based on ex post abnormal stock or profit returns after IPOs. We obtained support for the signaling and self-selection effects: firms having higher quality, non-state ownership, and larger leverage ratio were more likely to conduct IPOs in Hong Kong instead of in Mainland China. Also consistent with the signaling theory, we found that firms listed in Mainland China were more likely to use IPO underpricing as a signal for firm quality than firms listed in Hong Kong were.
DegreeDoctor of Philosophy
SubjectGoing public (Securities) - China.
Real estate business - China - Finance.
Dept/ProgramReal Estate and Construction

 

DC FieldValueLanguage
dc.contributor.advisorWong, SK-
dc.contributor.advisorChau, KW-
dc.contributor.authorWei, Qian-
dc.contributor.author韦茜-
dc.date.issued2011-
dc.identifier.citationWei, Q. [韦茜]. (2011). Do regulatory frameworks affect the choice of IPO location and post-IPO performance of Chinese real estate firms?. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b4729765-
dc.description.abstractIn recent years, the number of Chinese companies going public has grown significantly. Some of these companies have listed their shares locally in Shanghai and Shenzhen, while others have chosen a stock exchange with better access to international capital (e.g., Hong Kong). This thesis examines 1) the determinants of the firms’ choice regarding initial public offering (IPO) locations and 2) whether IPO locations might affect their subsequent performance. Our study focuses solely on firms in the real estate sector in which pre-IPO attributes as well as the underlying asset value can be identified and measured. Our dataset includes 29 Chinese real estate firms that have issued shares in Shanghai or Shenzhen and 28 Chinese firms with IPOs in Hong Kong during the period of 1992-2008. To explain their IPO location choice, the self-selection or signaling theory suggests that firms with higher quality would signal this information by issuing shares in Hong Kong. Given the more stringent listing requirements and better informational disclosure schemes in the Hong Kong market, if a firm has low quality, such information is more likely and quickly to be discovered in Hong Kong than in Mainland China. Therefore, it is costly for such firms to imitate good firms’ IPO location choice. Once the firms have been listed, the corporate governance literature suggests that firms listed in Hong Kong would demonstrate a greater performance increase than those listed in Mainland China, because Hong Kong has a mature system of information disclosure, analyst coverage, and law enforcement. We found that firms listed in Hong Kong achieved higher Return on Asset (ROA) than those listed in Mainland China. We then construct four proxies for firms’ unobserved quality based on ex post abnormal stock or profit returns after IPOs. We obtained support for the signaling and self-selection effects: firms having higher quality, non-state ownership, and larger leverage ratio were more likely to conduct IPOs in Hong Kong instead of in Mainland China. Also consistent with the signaling theory, we found that firms listed in Mainland China were more likely to use IPO underpricing as a signal for firm quality than firms listed in Hong Kong were.-
dc.languageeng-
dc.publisherThe University of Hong Kong (Pokfulam, Hong Kong)-
dc.relation.ispartofHKU Theses Online (HKUTO)-
dc.rightsThe author retains all proprietary rights, (such as patent rights) and the right to use in future works.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.source.urihttp://hub.hku.hk/bib/B47297657-
dc.subject.lcshGoing public (Securities) - China.-
dc.subject.lcshReal estate business - China - Finance.-
dc.titleDo regulatory frameworks affect the choice of IPO location and post-IPO performance of Chinese real estate firms?-
dc.typePG_Thesis-
dc.identifier.hkulb4729765-
dc.description.thesisnameDoctor of Philosophy-
dc.description.thesislevelDoctoral-
dc.description.thesisdisciplineReal Estate and Construction-
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.5353/th_b4729765-
dc.date.hkucongregation2011-

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