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City‐level political uncertainty and city‐level IPO activities
Author(s) -
Luo Danglun,
Tong Naqiong,
She Guoman
Publication year - 2017
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12341
Subject(s) - initial public offering , politics , shock (circulatory) , successor cardinal , business , turnover , china , demographic economics , government (linguistics) , monetary economics , finance , political science , economics , law , medicine , management , mathematical analysis , mathematics , linguistics , philosophy
Abstract Based on the unique city‐level politician turnover data between 1999 and 2012 in China, we document that the number of IPO s at the city level decreases during the city‐level politician turnover period. Such negative shock is more pronounced for non‐state‐owned enterprises ( NSOE s) than for SOE s and more pronounced for local SOE s than for central SOE s. Higher political uncertainties amplify the negative shock when the successor politician is nonlocal, when turnover occurs during periods of higher local fiscal deficits or during party member election periods, and when government interventions are higher or confidence‐in‐court is lower. Consequently, IPO firms listed during a political turnover period underperform their counterparts.