The IPO process is a way for companies to improve their corporate governance and for investors to assess company quality.This paper posits that investor choices vary with differences in investment ability and experience.Three groups of investors with large holdings,namely individual investors,bluechip institutional investors and underperforming institutional investors,are compared by their use of three types of corporate governance information:board characteristics,equity structure and affiliated relationships.Overall,institutional investors make greater use of corporate governance information than individual investors,with blue-chip institutional investors making the greatest use.Further,bull-bear markets exert a significant influence on the behavior of both individual and underperforming institutional investors.These results enrich the IPO literature and contribute to optimal social fund allocation in the stock market.
Movement of major fund1 flows has great impact on capital markets, especially in China. This study investigates the relationship between abnormal main fund movements and firm＇s earnings management behavior, specifically, whether the abnormal main fund movements cause firms to keep a low profile for ＂self-protection＂ from being detected by the government. The empirical results of this study suggest that： （1） The mandatory disclosure of the ＂Top-ten circulating stockholders＂ requirement does not only reduce information asymmetry between investors and listed firms, but also strengthens and improves the efficiency of related government regulations in detecting disclosure of false information. This, in turn, increases the risk of being detected for firms with earnings management activities. （2） After abnormal main fund movements, relevant firms significantly reduce the level of earnings management to avoid attention from the public and regulatory agencies. （3） Using political connections as a proxy for the ＂shield effect＂ to mask political cost, we show that the negative relation between abnormal main fund movements and earnings management exists only for the subsample of firms without political connections. This paper provides a new angle for political cost study, and suggests that traditional political cost hypothesis should be further generalized.
