Title: The Minimum Issuance Ratio System for IPO Firms and Fund Padding in Fundraising Projects

Speaker: Hongbo PAN

Time: 10:00–11:30, Wednesday, June 10, 2026

Venue: Room 245, Quanxue Building

Organizers: School of Accounting, Dongbei University of Finance and Economics; Liaoning Province Graduate Innovation and Academic Exchange Center for Capital Market Finance and Accounting

Abstract:

The minimum issuance ratio system for IPO firms in China aims to ensure stock liquidity and protect investor interests, but it also leads to corporate decision‑making distortions due to one‑size‑fits‑all regulation. Using project‑level data on IPO fundraising proceeds, this paper systematically examines the bunching effect near this policy threshold and its impact on fund padding in fundraising projects via a bunching approach. The findings are as follows. (1) There is a significant bunching phenomenon near the minimum issuance ratio threshold. The policy forces IPO firms to increase their issuance ratio by an average of 3.98 percentage points, prompting them to pad fundraising projects to meet the threshold. The probability of fund padding in a project rises by 12.58%, and the padding amount increases by 6.60%. (2) These effects are more pronounced among firms with fewer pre‑IPO investment opportunities and lower financing needs. Greater intermediary independence and the presence of technical or business backgrounds among regulatory reviewers can effectively curb fund padding. (3) The padded funds ultimately flow into non‑productive projects or wealth management products. Padded projects not only reduce IPO pricing efficiency, exacerbate post‑IPO overinvestment, and lead to performance reversals, but also distort industry‑wide resource allocation through negative spillovers. This paper provides a unified institutional explanation for various inefficiencies in IPO resource allocation from the perspective of the regulatory drivers of fund padding. It offers theoretical insights for reforming the minimum issuance ratio system and helps improve capital market financing and investment functions at the issuance entry point.

Lecture Profile:

Hongbo PAN is a Professor and Doctoral Supervisor at the School of Economics and Management, Wuhan University. His research focuses on corporate finance, corporate governance, and corporate ESG. He has been recognized as a member of the First Batch of Enterprise Financial Consulting Experts by the Ministry of Finance and a Ministry of Finance Accounting Leading Talent (Academic Track). He has led several projects funded by the National Natural Science Foundation of China (NSFC) and the Ministry of Education Humanities and Social Sciences Foundation. His work has been published in leading domestic and international journals such as Economic Research Journal, Management World, Accounting Research, Journal of Financial Research, Nankai Business Review, China Industrial Economics, and The Journal of Law and Economics. He has received the TCFA Annual Conference Best Paper Award, Hubei Provincial Social Science Outstanding Achievement Award, Ministry of Finance Excellent Paper Award, and the Hubei Provincial Accounting Society Outstanding Research Project Special Award. He serves as an anonymous reviewer for major journals including Economic Research Journal, Management World, Accounting Research, Journal of Financial Research, Management Science Journal, Nankai Business Review, The World Economy, and The Journal of Law and Economics, as well as a peer reviewer for NSFC and the National Social Science Fund of China. He is also an Executive Director of the Accounting Education Sub‑Committee of the Accounting Society of China, Vice President of the Wuhan Accounting Society, Director of the Financial Management Professional Committee of the Hubei Provincial Accounting Society, Executive Director of the Hubei Provincial Accounting Society, and a Professional Editor for Finance and Accounting at Luojia Management Review.