Revolving around political connections: the negative effect of government venture capital backing on IPO valuation

IF 3.2 2区经济学 Q1 ECONOMICS

Socio-Economic Review Pub Date : 2023-10-14 DOI:10.1093/ser/mwad056

Tan Li, Jar-Der Luo, Enying Zheng

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引用次数: 0

Abstract

Abstract We examine how government venture capital (GVC)—a specific type of political connection—affected initial public offering (IPO) valuation. Contrary to the well-recognized benefits of political connections in channeling access to financial resources in China, our analysis of 959 IPOs between 2008 and 2014 suggests that GVC backing lowers IPO valuation. This baseline effect is moderated by other sources of political connection (e.g. government ownership, state sector experience of top management team members, private sector partner status, and institutional environments). We argue that it is the negative signaling mechanism revolving around political connections that accounts for this observable pattern. This research enriches the signaling theory by uncovering signal emergence and analyzing the interactions between several signaling sources of political connection. Specifically, it contributes to a better understanding of political connections by specifying an undesirable consequence of state-led financialization, which has timely practical relevance as China’s capital market is steering toward a rule-based system.

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围绕政治关系:政府风险投资支持对IPO估值的负面影响

摘要本文研究了政府风险投资(GVC)——一种特殊类型的政治关系——如何影响首次公开发行(IPO)的估值。我们对2008年至2014年间959宗IPO的分析表明，与众所周知的政治关系在中国引导融资渠道方面的好处相反，全球风险投资的支持降低了IPO估值。这种基线效应被其他政治关系来源(如政府所有权、高层管理团队成员的国有部门经验、私营部门合作伙伴地位和制度环境)所缓和。我们认为，围绕政治关系的负面信号机制解释了这种可观察到的模式。本研究通过揭示信号的产生和分析政治联系的几个信号来源之间的相互作用，丰富了信号理论。具体来说，它通过指出国家主导的金融化的不良后果，有助于更好地理解政治关系，这在中国资本市场转向以规则为基础的体系之际具有及时的现实意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Socio-Economic Review Multiple-

CiteScore

6.80

自引率

10.80%

发文量

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