Journal ArticleDOI
What comprises IPO initial returns: Evidence from the Chinese market
TLDR
In this paper, the authors studied the long-term performance of the book-building pricing mechanism in the Chinese market and found little evidence supporting the classic information theory on IPO underpricing but strong evidence supporting behavioral arguments regarding IPO overpricing.Abstract:
We studied the IPO price and long-term performance in China after the adoption of the book-building pricing mechanism. Using comparable firm value, we separated the IPO initial returns into pre-market deliberate underpricing and aftermarket overpricing. This separation enables us to clearly test different theories regarding high IPO initial returns. We find little evidence supporting the classic information theory on IPO underpricing but strong evidence supporting the behavioral arguments regarding IPO overpricing. Even though the results are specific to the Chinese market, we find some general results on what composes and drives IPO initial returns that have been lacking in the IPO literature.read more
Citations
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Journal ArticleDOI
Equilibrium in the Initial Public Offerings Market
TL;DR: In this article, the authors suggest that the quantitative magnitude of underpricing can be explained with a market structure in which underwriters want to underprice excessively, issuers are focused on services bundled with underwriting rather than on maximizing the offer proceeds, and there is limited competition between underwriters.
Journal ArticleDOI
Data mining investigation of co-movements on the Taiwan and China stock markets for future investment portfolio
Shu-Hsien Liao,Shan-Yuan Chou +1 more
TL;DR: This study investigates the co-movement in the Taiwan and China (Hong Kong) stock markets under the ECFA using a data mining approach, including association rules and clustering analysis.
Journal ArticleDOI
Equilibrium in the IPO Market
TL;DR: In this paper, the authors suggest that the quantitative magnitude of underpricing can be explained with a market structure in which underwriters want to underprice excessively, issuers are focused on services bundled with underwriting rather than on maximizing the offer proceeds, and there is limited competition between underwriters.
Journal ArticleDOI
Twenty Years of Accounting and Finance Research on the Chinese Capital Market.
TL;DR: In this article, a review of accounting and finance research pertaining to the Chinese capital market in Mainland China published in Tier 1 and Asia-Pacific regional journals during the 1999-2018 period is presented.
Journal ArticleDOI
The role of venture capitalists in small and medium-sized enterprise initial public offerings : evidence from China.
TL;DR: Li et al. as mentioned in this paper examined the role of VCs in public firms listed on the Small and Medium Enterprise Board and the Growth Enterprise Board, and found that VC-backed initial public offerings have higher premiums, lower initial underpricing and higher subsequent market reaction.
References
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Journal ArticleDOI
The Long‐Run Performance of initial Public Offerings
TL;DR: In this article, the authors used a sample of 1,526 IPOs that went public in the U.S. in the 1975-84 period, and found that in the 3 years after going public these firms significantly underperformed a set of comparable firms matched by size and industry.
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The New Issues Puzzle
Tim Loughran,Jay R. Ritter +1 more
TL;DR: In this paper, the authors show that companies issuing stock during 1970 to 1990, whether an initial public offering (IPO) or a seasoned equity offering (SEO), significantly underperform relative to nonissuing firms for five years after the offering date.
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Risk, uncertainty, and divergence of opinion
TL;DR: In this paper, the authors explore the implications of a market with restricted short selling in which investors have differing estimates of the returns from investing in a risky security, and explain the very low returns on the stocks in the highest risk classes, the poor long run results on new issues of stocks, the presence of discounts from net value for closed end investment companies, and the lower than predicted rates of return for stocks with high systematic risk.
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Why new issues are underpriced
TL;DR: In this paper, the authors present a model for the underpricing of initial public offerings based on the existence of a group of investors whose information is superior to that of the firm as well as that of all other investors.
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Initial Public Offerings and Underwriter Reputation
TL;DR: In this article, the authors examined the returns earned by subscribing to initial public offerings of equity (IPOs), and they showed that IPOs with more informed investor capital require higher returns, and that prestigious underwriters are associated with IPOs that have lower returns.