Is it important to consider the role of the interaction of knowledge asymmetries, local law framework, and agency issues in managing closed Chinese firms from the perspective of IPO underpricing
It addresses and answers the subject matter in great detail. Hung et al. Hung et al. (2019). Describe how China’s reforms and policies have made the private sector more open, making it the main driver of economic growth. Family businesses play a major role in China’s economic development. From 2000 to 2011, the annual growth in family-owned companies was 21.3%. (Huang et al. 2019). The background information serves as the base for all investigations.
The most critical aspect of any business is financial decision making. Jiang et al. (2018) carried out extensive research and found that knowledge asymmetry and agency difficulties have an impact on investors’ investment decisions. The problem is the emphasis placed on management conflicts and shareholder issues by most studies. This leaves out agency concerns in managing minor owners and blockholders. Huang et. al. (2018) make this clear. Since majority shareholders make up most family businesses, the authors focus only on them. They ignore agency concerns caused by other groups.
Jing et.al. Jing et al. (2018) found that the relation between multiple large shareholders and investment effectiveness is not as strong for companies with less agency problems and more information asymmetry. The supervisory role of MLS can be used when distribution and information management are poor. The economic benefits of increased efficiency
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