Management Review

Management Review ›› 2021, Vol. 33 ›› Issue (3): 3-13.

• Economic and Financial Management •     Next Articles

Do Security Companies Going Public Improve the Market Performance of IPO Enterprises?

Wang Huacheng1, Chen Zhanliao1, Ouyang Caiyue2, Wang Xin1   

  1. 1. School of Business, Renmin University of China, Beijing 100872;
    2. School of Economics and Management, Beijing Jiaotong University, Beijing 100044
  • Received:2019-07-17 Online:2021-03-28 Published:2021-04-06

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Abstract: Security companies play an important role in the process of initial public offering in capital market. This paper studies whether security companies going public would affect the market performance of IPO enterprises. Taking advantage of the A-share IPO data from 2007 to 2016 and adopting the PSM+DID method, this paper finds that security companies going public indeed improve the market performance of IPO enterprises, as shown in lower underpricing rate, and higher buy and hold long-term yields (BHAR). In addition, this paper finds that the worse of the earnings quality of the pre-IPO enterprises, the higher the effect of improvement of market performance. Finally, this paper finds that compliance level and risk management ability are the two important channels that security companies going public improve the market performance of IPO enterprises. This paper enriches the literature on going public of financial intermediaries and the market performance of IPO enterprises. And these findings also have policy implications on regulatory authorities given that the financial industry in China is under deep reform.

Key words: security companies, going public, the market performance of IPO enterprises