Friday, June 24, 2011

What's Wrong with Chinese IPOs?

Research Paper Renaissance Capital

China Must Solve its IPO Problems

When China first began tapping the IPO market twenty years ago, the People’s Republic of China was in the driver’s seat, offering investors only what the PRC wanted to sell. Today, it is the potential purchasers who are delineating the standards for the types of businesses, valuation and disclosure under which they are willing to invest. While the US SEC can tighten its regulatory purview, the ultimate responsibility for complete and accurate disclosure lies with company management and others involved in preparation for an IPO. In the end, if prospective Chinese IPOs learn the tough lessons of today’s flawed IPOs and the PRC steps up its regulatory and audit oversight, China will produce many well-run, innovative companies deserving of public investment.

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