IPO underpricing to retain family control under concentrated ownership: Evidence from Hong Kong

Yu, Xin and Zheng, Yeng (2012) IPO underpricing to retain family control under concentrated ownership: Evidence from Hong Kong. Journal of Business Finance and Accounting, 39 5-6: 700-729. doi:10.1111/j.1468-5957.2011.02278.x

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Author Yu, Xin
Zheng, Yeng
Title IPO underpricing to retain family control under concentrated ownership: Evidence from Hong Kong
Journal name Journal of Business Finance and Accounting   Check publisher's open access policy
ISSN 0306-686X
1468-5957
Publication date 2012-06
Year available 2012
Sub-type Article (original research)
DOI 10.1111/j.1468-5957.2011.02278.x
Open Access Status
Volume 39
Issue 5-6
Start page 700
End page 729
Total pages 30
Place of publication Chichester, United Kingdom
Publisher Wiley-Blackwell Publishing
Language eng
Abstract This study examines whether family firms utilize IPO underpricing in order to retain family control as a means of avoiding outside blockholders. Using a sample of firms listed in Hong Kong where corporate ownership is concentrated, we find that larger IPO underpricing is associated with stronger family involvement, and with greater potential for diffusing ownership among family members. We further find evidence that firms with strong family involvement attract more subscription for their shares, have less concentrated outside blockholdings, and reduce ownership more slowly than do firms with weak family involvement, suggesting that family owners use underpricing to reduce outside blockholdings. We also find that firms controlled by family trusts have less IPO underpricing, suggesting that IPO underpricing and the family trust are effective substitute methods for retaining family control.
Keyword IPO
Underpricing
Family firms
Retain control
Concentrated ownership
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ
Additional Notes First published online: 17 February 2012. Issue is for June/July 2012

Document type: Journal Article
Sub-type: Article (original research)
Collection: UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 7 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 7 times in Scopus Article | Citations
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Created: Fri, 11 Oct 2013, 09:31:46 EST by Karen Morgan on behalf of UQ Business School