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IPO valuation of entrepreneurial firms in China's new growth enterprise market An examination of board composition, top management team's ownership and human capital

IPO valuation of entrepreneurial firms in China's new growth enterprise market An examination of... Purpose – The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of top management teams (TMTs) and their human capitals, in entrepreneurial firms of China's new growth enterprise market (GEM). Also, it aims to evaluate the relative importance of various factors in determining initial public issuing value. Design/methodology/approach – The SPSS 16.0 statistical package was used to perform the analysis. The authors compute descriptive statistics, calculate correlation coefficients for all variables and use multiple regression analysis test the hypothesis. Findings – The paper shows that IPO valuation has significant positive correlation with board composition, significant negative correlation with TMT ownership dispersion, but it does not show significant correlation with TMT human capital. The empirical results also show that: the influence of variable “CEO also Founder” on IPO valuation is significant, which indicates that investors are concerned with the leadership of firms in IPO. Also the influence of the variable “underwriter prestige” on IPO valuation is also significant, but weaker, which indicates that investors still keep confidence in the well‐known underwriters for their vision and ability of judging the firms. Research limitations/implications – Based on the first batch of 28 entrepreneurial firms listed on Chinese GEM, the sample size is relative small. Also, the measure of TMT human capital, defined by the education degree level, is not an accurate rule in this paper. Originality/value – Focusing on 28 new firms in China's new security market, this paper presents some interesting and new findings, by using data from the first batch of listed companies in China's GEM, which comprises many privately‐owned, high technology and entrepreneurial firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Chinese Entrepreneurship Emerald Publishing

IPO valuation of entrepreneurial firms in China's new growth enterprise market An examination of board composition, top management team's ownership and human capital

Zhijian Xu; Libo Xu
Journal of Chinese Entrepreneurship , Volume 4 (3): 15 – Sep 7, 2012
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References (60)

Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1756-1396
DOI
10.1108/17561391211262157
Publisher site
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Abstract

Purpose – The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of top management teams (TMTs) and their human capitals, in entrepreneurial firms of China's new growth enterprise market (GEM). Also, it aims to evaluate the relative importance of various factors in determining initial public issuing value. Design/methodology/approach – The SPSS 16.0 statistical package was used to perform the analysis. The authors compute descriptive statistics, calculate correlation coefficients for all variables and use multiple regression analysis test the hypothesis. Findings – The paper shows that IPO valuation has significant positive correlation with board composition, significant negative correlation with TMT ownership dispersion, but it does not show significant correlation with TMT human capital. The empirical results also show that: the influence of variable “CEO also Founder” on IPO valuation is significant, which indicates that investors are concerned with the leadership of firms in IPO. Also the influence of the variable “underwriter prestige” on IPO valuation is also significant, but weaker, which indicates that investors still keep confidence in the well‐known underwriters for their vision and ability of judging the firms. Research limitations/implications – Based on the first batch of 28 entrepreneurial firms listed on Chinese GEM, the sample size is relative small. Also, the measure of TMT human capital, defined by the education degree level, is not an accurate rule in this paper. Originality/value – Focusing on 28 new firms in China's new security market, this paper presents some interesting and new findings, by using data from the first batch of listed companies in China's GEM, which comprises many privately‐owned, high technology and entrepreneurial firms.

Journal

Journal of Chinese Entrepreneurship – Emerald Publishing

Published: Sep 7, 2012

Keywords: China; Entrepreneurialism; Human capital; Boards of directors; Underwriting; Entrepreneurial firms; Valuation; Initial public offering; Growth enterprise market

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