“…That is, the quota allocation functioned as a de facto incentive device that induced subnational governments to select better-performing firms for initial public offerings (IPOs) or seasoned equity offerings (SEOs). Finally, detailed evidence from twenty-three provincial-level regions suggests that the majority of IPO firms selected by subnational governments had been better-performing state-owned enterprises before they went public (Julan Du and Chenggang Xu 2009). This further indicates that the Chinese regulatory decentralization is somewhat effective at the IPO stage.…”
China's economic reforms have resulted in spectacular growth and poverty reduction. However, China's institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve the "China puzzle," this paper analyzes China's institution—a regionally decentralized authoritarian system. The central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws. China's reform trajectories have been shaped by regional decentralization. Spectacular performance on the one hand and grave problems on the other hand are all determined by this governance structure. (JEL O17, O18, O43, P21, P25, P26)
“…That is, the quota allocation functioned as a de facto incentive device that induced subnational governments to select better-performing firms for initial public offerings (IPOs) or seasoned equity offerings (SEOs). Finally, detailed evidence from twenty-three provincial-level regions suggests that the majority of IPO firms selected by subnational governments had been better-performing state-owned enterprises before they went public (Julan Du and Chenggang Xu 2009). This further indicates that the Chinese regulatory decentralization is somewhat effective at the IPO stage.…”
China's economic reforms have resulted in spectacular growth and poverty reduction. However, China's institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve the "China puzzle," this paper analyzes China's institution—a regionally decentralized authoritarian system. The central government has control over personnel, whereas subnational governments run the bulk of the economy; and they initiate, negotiate, implement, divert, and resist reforms, policies, rules, and laws. China's reform trajectories have been shaped by regional decentralization. Spectacular performance on the one hand and grave problems on the other hand are all determined by this governance structure. (JEL O17, O18, O43, P21, P25, P26)
“…Second, China's stock exchanges were depicted as "a fertile breeding ground for rent seeking and corruption by regulators" (Zhang & Ma, 2012), which further highlights the lack of transparency in the operation of listing activities. This conclusion was found to be supported by Zhu (cited in Du & Xu, 2009), who condemned this selecting practice as a "market failure" and Tian and Megginson (2007)acknowledging that the system might prompt companies well-connected with the authority, instead of those of sound quality, to go public. Third, the political favour granted by the Government induced companies to disregard market discipline, in terms of "openness, integrity and efficiency" other than at the direct administrative intervention of the China Securities Regulatory Commission (Howie, 2011).…”
Section: China's Privatisation and Experience In Listing Soesmentioning
This paper critically reviews the literature on the roles of privatisation and market regulations in establishing the stock markets in transitional economies, with the focus on the case of Vietnam. Privatisation, or equitisation in Vietnam, can provide promising candidates for the stock market but can by no means replace the well-established institutions which are crucial for its long-term development. The experience from Russia, Czech Republic, Poland and China had shown that the results of mass privatisation could be frustrated if there was little transparency and investor protection on the stock market. For Vietnam, ownership in equitised State-owned Enterprises was still concentrated with the Government and the insiders, posing various risks to minority shareholders. It then required the authority to strengthen the regulatory environment to improve investor confidence.However, enhancing regulations by imitating those of more advanced markets is not expected to bring desirable outcome for stock markets in less developed countries but instead they should focus on the ability to enforce those regulations. In Vietnam, disclosure requirements imposed on listed companies seemed to be comprehensive but not enforceable. This again reveals another drawback of the stock market in Vietnam that can disadvantage minority shareholders.
“…As far as developing countries, local governments are an important nonfirm actor, because it is an administrative institution to deal with market immaturity and failure and a public utilities and services provider in local production networks. One of the benefits for firms from going public is obtaining more bargaining power with and more supports from local governments [55], and then they can make market expansion and promote innovation. These behaviours would improve bargaining power with global lead firms to move up towards the knowledge-intensive links along the value chain and get more profits, which triggers their upgrading.…”
Section: Financial Activities and Industrial Upgrading Of Locall Clusmentioning
confidence: 99%
“…Another reason why local governments are keen to encourage local firms to be listed is to obtain more stock allotment in the future [55]. The special fiscal decentralization system and political promotion tournament in China drive local officials to allocate scarce resources in favor of their administration performance.…”
Section: Financial Activities and Industrial Upgrading Of Locall Clusmentioning
confidence: 99%
“…Financial standards and other requirements in Chinese capital markets are very stringent for private enterprise and are more conducive to state-owned enterprises [55]. Many private Jinjiang enterprises turn to overseas capital markets.…”
Section: Going Public Interfirm Relationships and The Upgrading Of Lmentioning
Abstract:Extant literature concerns about industrial upgrading in developing countries, and stresses the importance of joining global production networks (GPN). Taking the perspective of the updating approach of GPN theory, this paper selects the case of China to combine local industrial upgrading with financial activities, and explores how going public triggers industrial upgrading in developing countries. In 2015, semi-structured interviews were conducted with 36 listed firms and their related partners in Jinjiang, a county-level city in China. The findings indicate that local lead firms in developing countries have been increasingly involved in the global financial market by going public, which in turn provides these countries with opportunities of industrial upgrading. However, it does not necessarily guarantee industrial upgrading. Whether or not going public can bring about industrial upgrading depends mainly on intrafirm coordination, reconfiguration of interfirm relationships, and extrafirm bargaining with local governments. This case study suggests that finance be integrated into GPN theory as some scholars suggest, and the impacts of local lead firms in developing countries on the dynamics or reconfiguration of GPN be taken consideration, especially in some specific sectors.
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