XXVI Edition

14-15-16 December 2017"

The Unintended Consequences of Regulations in Emerging Financial Markets: Evidence from the Chinese IPO market

derrien francois, hec paris

This paper explores the impact of regulations imposed by Chinese authorities on the development of the Chinese IPO market. Because of limits on prices and proceeds, the Chinese IPO market does not attract companies that need cash the most. Some regulations exclude firms from the domestic IPO market. Others induce firms with large growth options to list abroad. Some IPO firms that raise large amounts of cash decide to pay large dividends shortly after going public. Investors interpret this behaviour as evidence that they overestimated the growth options of these firms at the time of their IPO and react accordingly.

Area: Capital Structure and Corporate Finance

Keywords: Emerging markets; Initial Public Offerings; Regulation

Paper file

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