Does the threshold of information disclosure improve corporate governance? Evidence from China

Abstract

Since the Internet is currently being utilized in initial public offerings (IPOs), there has been a fundamental change in how IPOs can be distributed. Through the Internet, firms issue shares to a wider range of smaller investors. From the perspective of online marketing, we focus on the influences of information disclosure on IPO performance and corporate governance. We analyze if a higher degree of IPO firm performance in the IPO aftermarket is related to corporate governance. We build a corporate governance index CG for IPO firms, composed of equity structure, board characteristics, management style and disclosure quality. Through empirical evidence, we confirm that the threshold of information disclosure has positively effect on IPO firms performance. In particular, IPO firms with higher CG experience significant increases in EPS and ROA in the post-marketing. The impact of corporate governance on IPO firm performance is significant in the economic boom and non-significant in the economic recession.