Review of Quantitative Finance and Accounting

, Volume 14, Issue 4, pp 319–339

The Post-Issue Market Performance of Initial Public Offerings in China's New Stock Markets

Authors

  • Gongmeng Chen
    • Department of AccountancyThe Hong Kong Polytechnic University
  • Michael Firth
    • Department of AccountancyThe Hong Kong Polytechnic University
  • Jeong-Bon Kim
    • Department of AccountancyThe Hong Kong Polytechnic University
Article

DOI: 10.1023/A:1008358609204

Cite this article as:
Chen, G., Firth, M. & Kim, J. Review of Quantitative Finance and Accounting (2000) 14: 319. doi:10.1023/A:1008358609204

Abstract

In this paper, we investigate the post-issue market performance of initial public offerings (IPOs) in China's new stock markets. Our analysis focuses on whether and how institutional features unique to China differentially affect IPO performance. These features include the existence of dual-class shares for the same underlying firms (A-shares issued to domestic investors and B-shares issued to foreign investors) and the unusually long time lag between the offering and listing dates. Our sample consists of 277 A-share and 65 B-share IPOs that were listed on China's new stock markets during the 1992–1995 period. Our study has a number of interesting results. First, A-share IPOs are much more severely underpriced during the initial return period than B-share IPOs. Second, B-share IPOs underperform A-share IPOs (and the market) during the post-issue periods for up to three years. Third, the results of multivariate regression analyses strongly suggest that economic factors determining the post-issue performance of IPOs differ across the A-share and B-share samples.

privatizationIPOsstock returns

Copyright information

© Kluwer Academic Publishers 2000