Title

How to Exit Successfully via IPOs: An insight into the listing requirements of the emerging Growth Enterprise Market of China

Date of Award

2014

Degree Type

Thesis

Degree Name

Doctor of Philosophy

School

School of Business

Faculty

Health, Engineering and Science

First Advisor

Associate Professor Zhaoyong Zhang

Second Advisor

Dr Ian Patrick Austin

Abstract

Listing requirements are different across various stock markets. The Growth Enterprise Market of China (GEMC)—an emerging listing venue launched in 2009—has strict entry requirements for the four IPO factors: the firm’s fundraising amount, its net profit, potential growth rate, and net assets. Using a modified probit model based on previous studies, this study aims to examine the impact of these financial determinants on the IPO probability in the Chinese stock market. Using a sample of the initial 243 IPOs in the market over the 2009–2011 period, this study develops a regression model to investigate the relationships between these factors and suggests that the firm’s net profit and its growth rate substantively determine the IPO volume (fundraising amount). In addition, this study adopts probit models to test the influence of the four factors on IPO likelihood, and shows that: 1) the fundraising amount, as one of the most significant IPO determinants, is positively associated with IPO probability on the new listing market; 2) the net profit, as a fundamental IPO determinant, is positively associated with IPO probability, but also with other indicators, which demonstrates the fact that the GEMC is a profit-preferring listing venue; 3) the net assets determine IPO probability but not IPO volume on the market.

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