Corporate evolution following initial public offerings in China: a life-course approach

Abstract

We study the determinants of firms' post-IPO trajectory in terms of three outcomes: delisting; acquisition with change of corporate control; and acquisition without such change. Our risk assessment models examine some historical and some current information. Variables cover the perspectives of the issue itself, the issuer, investors, the industry and corporate control, the last being of particular interest in a mixed economy such as China. We find that delisting is predominantly influenced by issue-specific information, by the issuer's financial status leading up to the eventual outcome, and by corporate ownership and governance structure. Acquisition with andwithout change of control differs most significantly according to industry features, ultimate state ownership, divergence of cash flowrights and control rights, and the extent of board independence. Centrally we find that the trajectory is shaped by corporate control considerations. We conclude that the after-market outcomes are mixed consequences of market selection and government control.