The Impact of governmental intervention on the association between initial public offerings and future stock issuance

This study empirically examines the effect of initial public offering (IPO) issuance on seasoned equity offering (SEO) decisions and the impact of state-owned enterprises (SOEs) in China. Results indicate that specific IPO characteristics, corporate governance issues, and firm-specific factors determine the timing and size of an SEO. Findings reveal that a higher level of IPO underpricing leads firms to issue SEOs sooner with larger proceeds. The connections between IPOs and SEOs become less apparent in state-controlled firms. There are two major implications. First, firms can use IPO underpricing to obtain larger SEOs sooner in the presence of asymmetric information. Second, state control interferes with the pattern of firms raising capital from the Chinese stock markets