Empirical Analysis Of Post-Issue Operating Performance Of Enterprises That Go Public In 2001

IPO has been considered a better way to conduct further reform of the state-ownedenterprises. However, recent research by western economists has revealed that the majority ofthe enterprises that go public shared the declining operating performances after the offeringin following several years. This paper investigates the post-issue operating performance ofcompanies that conducted minority IPO in the Stock Exchange of Shanghai in year 2001. It isdocumented that state-owned firms exhibited declining operating performance after theoffering. Further, there is a negative relation between state ownership concentration andpost-issue operating performance decline, since this paper provides examination to the impactthat post-privatization ownership structure has on firm performance. The empirical findingoffers evidence in support of agency conflicts, and suggests that minority IPO, which provesto be low efficiency, cannot guide the new round of reform of the state-owned enterprises.