The Influence Of Political Identities Of Private Enterprises’ Ultimate Controlling Owners On The IPO Market

In 2017,there were 436 IPOs in China,accounting for more than quarter of the global IPO number(1,624).Nevertheless,there are still many imperfections in China’s IPO issuance system.The high IPO underpricing also attracts capital market funds to the primary market,resulting in mismatches of funds.As an important non-institutional factor of China’s private enterprises,political connections have an important impact on the IPO market.Based on the sample of listed private enterprises from 2009 to 2012,we study the influence of private enterprises’ ultimate controlling owners’ political connections on the IPO market and try to explore the mechanism of political connections to the IPO market.This paper studies private entrepreneurs’ political connections to IPO underpricing,private entrepreneurs’ political connections to initial turnover,private entrepreneurs’ political connections to lottery rate.The mechanism of signaling of the ultimate controlling owners’ political connections is discussed in this paper.The main conclusions of this paper are as follows.Firstly,political identities of private enterprises’ ultimate controlling owners can reduce their IPO underpricing.Secondly,ultimate controlling owners’ political identities of private enterprises can effectively depress initial turnover,and it can be inferred that the political identities can alleviate the investor sentiment in the aftermarket.Lastly,ultimate controlling owners’political identities of private enterprises have a significant effect on the promotion of lottery rate.