As regards excessive financing in general, Zhao, G. (2014) found the following: " (1) the top managers of listed companies with excessive financing obtain greater monetary and non-monetary private benefits; (2) this phenomenon is significant for both state-owned and non–state-owned firms; (3) in non–state-owned enterprises, the greater the managerial power, the greater the monetary and non-monetary private benefits top managers receive, whereas this relation does not exist in state-owned enterprises; and (4) the market responds negatively to companies with excessive financing that provide greater monetary private benefits to top managers, but there is no significant response to companies that provide greater non-monetary private benefits to top managers.
Excessive financing has become common in China’s IPO market and leads to holding excessive free cash, which will result in the opportunistic behaviour of management and will increase the agency costs of management.
Reference:
Article IPO excessive financing, managerial power, and private benef...
In a free and efficient market the Demand and supply will determine the adequate price.
IPO issuing system has disadvantages as well as investors keen to chase a new shares make the secondary market intense distortion. In this case, the domestic scholars have generally agreed that IPO has a negative effect on stock market.
- Badges
- Science topic
- Similar topics
- Computer Science
- Research Topics