An Emperical Analysis of the Corperate Ownership Concentration on the Operation Performance after IPOs of Chinese listed SMEs

The purpose of this paper is to investigates whether the large shareholders of small and medium firms (SMEs) take advantage of the inside information and decrease their shares before their operation performance begins to decline after the Initial Public Offerings (IPOs). By using the data from annual reports of SMEs listed on Shenzhen Stock Exchange in China from 2004 to 2006, this study explores both the relationship and the interaction effects between the change of operation performance and the ownership concentration of SMEs around their IPOs. The statistic analysis indicates that there is a significantly positive relationship between the ownership concentration and their operation performance after IPOs during the sample period. Moreover, the companies with higher ownership decreasing encounter more severe operation performance decline, which sugests that the listed companies intend to package their book profits before IPOs for the sake of increasing their issuing prices and enlarge their financing scales.