The Impacts of Institution Distance and Culture Difference on the Post Overseas-IPO Performance of Chinese Companies

Linyun Chen

Student thesis: Master thesis

Abstract

Under the trend of globalization, a rapidly rising number of companies seek opportunities to connect with global capital market and list on international stock exchanges. In pursuit of the ‘Bring in’ strategy proposed by President Jiang in 1997, the connection of Chinese companies with global capital market has become more and more closer. Up to 2017, there are more than 1000 Chinese companies listing on 15 main stock exchanges in six foreign countries. IPO is a financing strategy decision requiring a company to be engaged in long-term transition from a private- to public-hold company. However, there has been limited literature attending to issues how overseas IPO location choices impact the performance of Chinese companies afterwards. Using CSMAR® Overseas Listed Company Database, this paper tries to fill in this gap by answering the following questions: Whether culture difference and institution distance between China and host countries have impact on company performance after overseas IPO? If the impact exists, in what ways do culture difference and institution distance influence company performance? Based on the significant regression results, we argued that culture difference and institution distance between China and host countries are two factors related to the post-IPO operating performance measured by return on assets and return on equity. This paper closes with implication on how companies and Chinese government deal with these impacts.

EducationsMSc in Business, Language and Culture - Diversity and Change Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages77
SupervisorsEvis Sinani