Purpose This study aims to inform prospective listing firms, investors and regulators of the unique drivers of Chinese initial public offering (IPO) pricing on the Hong Kong Exchange. Design/methodology/approach Using a hand-collected IPO dataset, we investigate whether information uncertainty or investor exuberance drives underpricing and Chinese IPOs’ performance from 2002 to 2015, including 114 state-owned enterprises (SOEs). Findings Contrasting with the “listing bubble” in the China domestic stock market, generated by the overoptimism of retail investors, we highlight a “placing bubble” among Chinese firms listed in Hong Kong. This is driven by institutional investors’ buoyant demand for Chinese IPO shares, particularly those of SOEs. Chinese listing firms employ discreet earnings management strategies with their working capital accounts to smooth pre-IPO earnings, which becomes apparent to the market only in the long term. Originality/value This study is the first to examine the pricing of sought-after Chinese IPOs among international investors, who face various restrictions when investing in the Chinese domestic stock market. Additionally, it is the first study to measure earnings management using hand-collected pre-IPO data in IPO underpricing studies.

Purpose This study investigates whether Chinese local governments’ environmental attention can mitigate corporate “greenwashing”, focusing on the extent of environmental content in annual government work reports as indicative of government environmental attention. This study aims to determine whether enterprises respond to changes in local governmental attention by improving the quality of their environmental information disclosures. Design/methodology/approach Data from China’s A-share listed companies spanning 2013–2021 were sourced from the CSMAR database and company annual reports. Environmental attention data were manually gathered from local government work reports published on official local government websites by using text analysis methods. These datasets were analyzed empirically to assess the impact of local governments’ environmental attention on corporate greenwashing behavior. Findings Results show that increased governmental environmental attention significantly reduces corporate greenwashing behavior by alleviating corporate financing constraints, enhancing independent engagement in environmental initiatives and bolstering stakeholder oversight. Moreover, heterogeneity analysis indicates that the influence of government environmental concerns is pronounced in non-state-owned enterprises, firms with subpar audit quality and those exhibiting myopic management tendencies. Originality/value This study enriches the existing literature on the government–business nexus. It also introduces methodological innovations by employing a lexical analysis of environmental themes in local government work reports instead of using typical event study approaches. Furthermore, it uses a mediating effect model to identify the mechanisms through which government environmental attention influences corporate greenwashing, namely, government subsidies, corporate environmental initiatives and external stakeholder oversight.

Purpose The main purpose of this study is to examine the disclosure of earnings forecasts in firms' prospectuses to explain investor demands or, in other words, oversubscription rates of Malaysian initial public offerings (IPOs). Design/methodology/approach Ordinary least squares and robust methods were used to examine cross-sectional data comprising 466 fixed-price IPOs reported for the period from January 2000 to February 2020 on Bursa Malaysia. Findings The results showed that IPOs with earnings forecasts obtained higher oversubscription rates than those without earnings forecasts. IPOs with earnings forecasts provide value-relevant signals to prospective investors about the good prospects of firms, resulting in an increase in the demand for IPO shares. For the IPO samples listed during the global financial crisis (GFC) period, IPOs with earnings forecasts had negative impacts on the oversubscription rates. These results were robust to quantile methods and the two-stage least squares method. Research limitations/implications The research findings provide fresh information for investors regarding the importance of earnings forecasts as a trustworthy signal of a firm’s quality when making share subscription decisions. Practical implications The regulator is advised to encourage issuers to include earnings forecasts in their prospectuses since such forecasts help to increase the demand for IPOs. Originality/value This study contributes to the literature by offering empirical evidence regarding the signalling impact of earnings forecast disclosures on investor demands for Malaysian IPOs. Moreover, this study provides evidence demonstrating the impact of earnings forecast disclosures on oversubscription rates of Malaysian IPOs during the GFC period.

Purpose This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering (IPO) return. Design/methodology/approach The study sample covers the period from 2010 to 2019 and consists of 117 IPOs that are priced using the fixed price and listed on the Malaysian stock exchange (Bursa Malaysia). This study employed both the ordinary least square (OLS) and the quantile regression (QR) methods. Findings Investor demand, proxied by the over-subscription ratio (OSR), plays a moderating role in increasing the effect of investors' divergence of beliefs on initial return, and the moderation effects vary across the quantile of initial return. Pure moderation effects are observed at the bottom and top quantiles, suggesting that investor demand is necessary for divergence of beliefs to influence IPO initial return. However, at the middle quantile of initial return, investor demand is a quasi-moderator. That is, the OSR not only moderates the relationship between the divergence of beliefs and initial return but also has a positive effect on the initial return. Practical implications Investors' excessive demand for an IPO issue exacerbates the IPO under-pricing issue induced by a divergence of beliefs amongst investors, thus rendering greater equity market inefficiency. Originality/value To the authors' knowledge, this study is amongst the first to empirically investigate the moderating role of investor demand on the investors' divergence of beliefs and IPO initial return relationship.