Guanxi, media coverage and IPO approvals: Evidence from China

摘要

We investigate whether "guanxi" facilitate IPO approval, and whether media coverage can mitigate this rent seeking practice in China. We find that before 2015, "guanxi" did increase the IPO passing rate. But this changes after 2015 when the anti-corruption movement was brought to the financial area. For media coverage, though the effect of positive coverage is not evident, the negative coverage seriously affects the IPO passing rate. In particular, when the IPO applicants are hit by negative coverage, they actually end up with lower IPO passing rates even if social connection exists.