Title

An Empirical Assessment of A-Share IPO Under-Pricing in China

Document Type

Journal Article

Faculty

Faculty of Business and Law

School

School of Accounting, Finance and Economics / Finance, Economics, Markets and Accounting Research Centre

RAS ID

14408

Comments

This article was originally published as: Sohn, C., Tsui, A., Zhang, F., & Zhang, Z. (2012). An Empirical Assessment of A-Share IPO Under-Pricing in China. Seoul Journal of Business, 18(1), 25-57. Original article available here

Abstract

This paper investigates the under-pricing and long-run performance of 230 A-share IPOs issued in the Chinese markets using comparable firm multiples. We find that A-share IPOs are severely under-valued by issuers and underwriters at the offer, but over-valued by investors on the listing day. Both contribute to the severe under-pricing of IPOs in China. Our findings are robust across stock exchanges, classification of firms, criteria for choosing matching firms; absence of CSRC regulation and B-share market prices, respectively. The results also show that those over-valued IPOs by investors on the listing day under-perform those under-valued IPOs in the long-run.

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