Revolving around political connections
The negative effect of government venture capital backing on IPO valuation
Bibliographic Data
| ID | 3203268 |
|---|---|
| Authors | Tan Li (0000-0002-2411-6038, Business School, Soochow University , Suzhou, 215021, China), Jar-Der Luo (0000-0002-1387-9849, Tsinghua University), E Zheng (0000-0002-6326-0905, Peking University, corresponding author) |
| Year | 2024 |
| Volume | 22 |
| Issue | 1 |
| Pages | 395-440 |
| Publication date | 2024-04-10 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Socio-Economic Review (JOURNAL) |
| Journal identifiers | ISSN: 1475-1461 • E-ISSN: 1475-147X |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ser/mwad056 |
| OpenAlex | W4387662506 |
| Language | EN |
| Citations received | 1 |
| References cited | 81 |
We examine how government venture capital (GVC)-a specific type of political connection-affected initial public offering (IPO) valuation. Contrary to the well-recognized benefits of political connections in channeling access to financial resources in China, our analysis of 959 IPOs between 2008 and 2014 suggests that GVC backing lowers IPO valuation. This baseline effect is moderated by other sources of political connection (e.g. government ownership, state sector experience of top management team members, private sector partner status, and institutional environments). We argue that it is the negative signaling mechanism revolving around political connections that accounts for this observable pattern. This research enriches the signaling theory by uncovering signal emergence and analyzing the interactions between several signaling sources of political connection. Specifically, it contributes to a better understanding of political connections by specifying an undesirable consequence of state-led financialization, which has timely practical relevance as China's capital market is steering toward a rule-based system
Business · China · Economics · Government (linguistics) · Initial public offering · Market economy · Political capital · Political risk · Political science · Politics · Valuation (finance) · Venture capital · Corporate Finance and Governance · Finance · Political Influence and Corporate Strategies · Private Equity and Venture Capital
Dragon in a Three-Piece Suit
Law, finance, and economic growth in China
New Varieties of State Capitalism
The Government as Venture Capitalist
Signaling Theory
Sample Selection Bias as a Specification Error
Handbook of Organizations (RLE
Capitalism from Below
The Continuing Importance of Political Ties in China
Status Signals
Economic Action and Social Structure
Political Capital in a Market Economy
Time is money, efficiency is life”
Price and Advertising Signals of Product Quality
When Bureaucrats Meet Entrepreneurs
Job Market Signaling
When venture capital is patient capital
The political economy of price and status formation in the Bordeaux en primeur market
Where do prices come from? Sociological approaches to price formation
From uncertainty toward risk
Hiring as Cultural Matching
Financial markets as production markets
What is patient capital, and where does it exist
The hunt for red flags
Patient capital in entrepreneurial finance
The social construction of quality
The new whole state system
The rise of the 'shareholding state
Social Capital Activation and Job Searching
The Study of Boundaries in the Social Sciences
What Do Interlocks Do? An Analysis, Critique, and Assessment of Research on Interlocking Directorates
Networks as the Pipes and Prisms of the Market
Syndication Networks and the Spatial Distribution of Venture Capital Investments
Power and Centrality
The Categorical Imperative
The dilemma of recognition
| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |