The IPO underwriting market share in China: Do ownership and quality matter?

This paper investigates the determinants of initial public offering (IPO) underwriting market share in China. Using a sample of underwriters in China's IPO market during 2004-2012, we find the following results. First, underwriting quality is overall positively related to underwriting market share. Second, individual underwriting quality measures are significantly related to market share as well: Affiliated star analysts are valued by both state-owned enterprise (SOE) and non-SOE (NSOE) issuers. The post-IPO performance of previous clients (industry specialization) is a significant determinant of market share in the SOE (NSOE) IPO market. Third, central government ownership of underwriters is a significant determinant of market share in the SOE market. Finally, a further test on regulatory change shows that underwriting quality is playing an increasingly important role in enhancing underwriting market share in China's new issue reform era.