The Short-Term Impacts of the Registration-Based IPO Reform in China: Towards a More Sustainable Equity Market

Chun Zhou, Wenyu Zhou and Jiajun Lu
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Chun Zhou: Guanghua Law School, Zhejiang University, Hangzhou 310008, China
Wenyu Zhou: International Business School, Zhejiang University, Haining 314400, China
Jiajun Lu: International Business School, Zhejiang University, Haining 314400, China

Sustainability, 2021, vol. 13, issue 20, 1-17

Abstract: The sustainable development of a modern equity market heavily relies on an effective IPO system that can properly reflect the underlying risk, demand, and supply in the IPO market. Recently, China has implemented an unprecedented IPO reform that transforms the previous approval-based IPO system to a registration-based one. Despite its importance, the impacts of the reform still remain unexplored. Using firm-level data from the Chinese A-shares market, we show that the recent IPO reform significantly increases IPO cost and reduces the degree of IPO underpricing. We also investigated the impacts of the reform on the market structures in different IPO service markets. Overall, our findings are consistent with the hypothesis that the registration-based IPO reform makes the IPO system in China more market-oriented. To our best knowledge, this is the first empirical study that sheds light on the short-term impacts of the adoption of a registration-based IPO system.

Keywords: IPO reform; registration-based IPO system; IPO cost; IPO underpricing; the Chinese A-shares market (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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