earticle

영어

In this study, we investigate the effects of related party transactions of IPO firms on their market returns around their IPOs. We separately study them in various types of related party transactions: sales and purchases of goods and services between affiliated firms, related party funding – lending and borrowing of funds between affiliated firms, and the provision of credits, collaterals and mortgages between affiliated firms on initial and long-term market returns of IPO firms, using an extensive sample of 1,609 Chinese firms that went public by now. The sales to related party has a significant U-shaped effect on initial returns of both high-return and low-return IPOs, while the asset trading between related parties has a significant reverse U-shaped effect on initial returns of lowreturn IPOs. In addition, lending to related party has a significant U-shaped effect on initial returns of both high-return and low-return IPOs while debt financing from related party has a significant Ushaped effect on initial returns of high-return IPOs. Lastly, the guarantee provided for related party has a significant U-shaped effect on initial returns of high-return IPOs, while high-return firms get guaranteed from related party have higher initial returns of IPOs than not.