Accounting Performance Inflated by Private Equity before IPOs: Evidence from Chinese Firms
With Professor Hong Bo, SOAS
4-6pm, Wednesday 9 December 2015
Room S-1.04, Strand Campus, King's College London
We examine 329 Private Equity (PE) transactions received by Chinese listed nonfinancial firms during 2000-2011 to reveal how China’s PE investment differs from that elsewhere. We document that (1) the governance role of PE, although widely documented based on firms in mature financial markets, is not important for Chinese PE recipient firms; (2) PE funds are used by Chinese recipient firms as a means to boost short-term accounting performance before IPOs. This pumping up effect exits especially for small private firms listed on China’s newly established Small and Medium Enterprises (SME) board and the ChiNext board. Our result suggests that the Chinese IPO market has been used as a speculative venture by PE investors.
About the speaker
Dr Hong Bo is Reader in Financial Economics at the Department of Financial & Management Studies, SOAS, University of London. Dr Bo received her degrees in Economics from Lanzhou University (BSc.); Renmin University of China (MSc); London School of Economics and Political Science, UK (MSc.); and University of Groningen, the Netherlands (PhD). Before joining SOAS in 2004, Dr. Bo was an assistant professor at Faculty of Economics, University of Groningen, The Netherlands. Dr Bo’s research covers topics in financial economics, including firm investment decisions under uncertainty, capital market imperfections, comparative financial systems, corporate finance, corporate governance, and the Chinese economy. She has published in well-recognized academic journals, including Journal of Corporate Finance, Journal of Banking and Finance, Economica, European Finance Review, Regional Studies, European Journal of Finance, and International Review of Financial Analysis, etc.