Product diversification strategy, business group affiliation, and IPO underpricing: A study of C hinese firms
研究了中国企业产品多元化战略对IPO抑价的影响，发现多元化程度越高，IPO抑价越大，但企业集团的非市场资本（政治、关系、声誉资本）能缓解这种关系，帮助公司减少折价。
Research Summary : Extant research has largely ignored if and how product diversification strategy influences IPO performance. We intend to fill this gap in the literature, especially in relation to transition economies where the role of diversification is institutionally bound. Specifically, drawing on the strategic actions and political connections arguments, we contend that the level of a firm's product diversification has a positive relationship with IPO underpricing. Given the prominent role of business groups in shaping firms’ diversification strategies in transition economy, we further examine whether business groups’ nonmarket capital—political, relational, and reputational capital—moderates the relationship between product diversification strategy and IPO underpricing. Managerial Summary : Due to the lack of transparency, investors in transition economies face higher ex ante uncertainties and have to bear more investment risks. As such, IPO firms have to “leave more money on the table” to compensate investors. This study aims to answer the question of whether and how an IPO firm's corporate strategy and business group affiliation affect investors' perceived uncertainties and, thus, the need to leave a large amount of money on the table to compensate investors. Using a sample of IPO firms in China, this study finds that the nonmarket capital that stems from business group affiliation helps mitigate the uncertainties investors perceive with higher levels of diversification, thus reducing the need for IPO firms to discount their offerings too much so that they can retain more wealth for business development.