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The Impact of Foreign Strategic and Corporate Investors on H‐Share IPO Performance
Author(s) -
Brockman Paul,
Cheng Louis T. W.,
Leung Tak Y.
Publication year - 2016
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12156
Subject(s) - initial public offering , business , institutional investor , accounting , monetary economics , financial system , corporate governance , finance , economics
Since 1993, foreign institutional investors (strategic and corporate) have been permitted to invest in Chinese companies listed in Hong Kong as H‐shares. We examine the impact of strategic and corporate investors on H‐shares before, during, and after their IPO s. We observe that strategic and corporate investors select their investment candidates based on specific pre‐ IPO firm characteristics. The certification effect of corporate investors generates a significantly positive effect on outside investor demand. In addition, the presence of foreign institutional investors, particularly strategic investors, and post‐ IPO performance are positively related. Overall, we document a positive effect of foreign institutional investors on H‐firms.