Do CEO Attributes Create Value in IPO Price Revision? Evidence from China

ABSTRACT

This study investigates the influence of chief executive officer (CEO) attributes on price revisions in initial public offerings (IPOs) in China. Using samples of 628 firms from the ChiNext Board and 555 firms from the Small and Medium-Size Enterprises Board, we find that political connections, social networks, media exposure, tenure, and salary ratio of these CEOs significantly affect price revisions. In addition, political connections have great value for issuing firms, and media exposure plays a monitoring role in IPO pricing. Further, politically connected CEOs prefer setting high offering prices, leading to underperformance in the long term.

KEYWORDS:

• CEO attributes
• IPO
• political connection
• price revision

Supplementary Material

Supplemental data for this article can be accessed on the publisher’s website.

Notes

1. The ChiNext Board, which was established in June 2009, is like NASDAQ in the US.

Additional information

Funding

This study is sponsored by the National Natural Science Foundation of China [71773025 and 71532004]; the New Century Talents of Ministry of Education [NCET-13-0167]; the Heilongjiang Postdoctoral Special Fund [LBH-TZ0508]; the Fundamental Research Funds for the Central Universities [HIT.BRETIII.201408]; and the National Key Research and Development Program of China (2020YFB100614).