Relationship-Based Resource Allocations: Evidence from the Use of “Guanxi” during SEOs
研究中国股市增发审批中“关系”的作用，发现关系显著提高增发获批概率，尤其对盈余管理、关联交易异常的公司，但关系获批的公司后续业绩更差，导致资源配置低效和社会福利损失。
We examine the role of relationship-based resource allocations during the approval process of seasoned equity offerings (SEOs) in the Chinese capital market. Our results show that guanxi-based relationships significantly increase the likelihood of SEO approvals, particularly for suspect SEO applicants with abnormal levels of earnings management (EM), related-party transactions (RPTs), and intercompany loans. More importantly, we find that guanxi-influenced SEO firms have significantly poorer performance in the post-SEO period, which indicates that it results in inefficient resource allocations. Overall, our evidence suggests that relationship-based resource allocations lead to negative spillover effects that impose social welfare losses.