This paper investigates whether initial public offering (IPO) announcements have any price impact on existing stocks in China. Using the Chinese IPO approval regime as a natural experiment, we find that IPO approval announcements have a negative price impact on stocks. This price effect appears to be a drift in equilibrium prices and is more pronounced on stocks that are more correlated with the IPO. These findings support an expectation-based downward-sloping demand curve hypothesis. We also document negative price reactions around the IPO listing day, which is consistent with the findings by previous authors. Further evidence rules out the signal effect of IPO approval announcements. In sum, IPO approvals can influence prices of other stocks by shaping the expectation of a change in the supply-demand equilibrium without actual trading of IPO shares.

It is well documented that the time-varying bond excess returns can be explained by predetermined variables such as information in the term structure and macro economic variables. Recent studies suggest that demand and supply of bonds influence bond excess returns. We extend the literature and find that monetary system attributes affect return dynamics in the bond market. By introducing a theoretical model to forecast excess returns on Treasury bonds in the context of China’s unique monetary system, this paper attributes the predicted components of bond excess returns mainly to the inflexible term structures of official interest rates set by China’s central bank.

This paper attempts to study the causal effect of examiner busyness on patent quality and firm value. Using a broad set of patent quality measures, we find strong evidence that patents allowed by busy examiners exhibit significantly lower quality. Further, examiner busyness of firms’ patents negatively predicts the firms’ future stock returns, which is consistent with investor underreaction to examiner busyness. Examiners’ experience helps attenuate the negative effect of examiner busyness.

We investigate whether international operations enhance information links between firms and foreign investors. Exploiting novel subsidiary-level data and within-location variations, we show that, after expanding into another country, a firm attracts greater investment allocation from funds from that country than from other foreign funds. This increase is economically significant, equivalent to one-fifth of the average firm weight in a country-specific portfolio. The observed effect cannot be attributed to funds’ influence, persists even when funds are already familiar with the firm, and helps them generate superior risk-adjusted returns. Our results suggest that firms’ cross-border economic activities contribute to global financial interconnectedness.