 THE INITIAL RETURNS OF PROFIT-EXEMPTED IPOS IN TAIWANQun Wang and Po-Hsin Ho The International Journal of Business and Finance Research, 2022, vol. 16, issue 1, 1-18 Abstract: This study investigates a unique sample of firms exempted from the profitability requirement of conducting initial public offerings (IPOs) in Taiwan. From 2005–2018, 67.31% of profit-exempted IPO firms were concentrated in the chemical and bio-pharmaceutical industry. The underpricing of profit-exempted IPO firms was 5.06% lower than those of other IPO companies. Additionally, the initial returns of profitexempted IPO companies during the hot market were 18.82% higher than those of other IPO companies. In opposition to the signaling hypothesis, high-tech firms that are exempted from the profitability requirement may issue IPOs in the hot issue market and deliver optimistic messages about their future operations to mislead investors. Profit-exempted IPO companies obtain higher proceeds from IPOs by misleading investors about the true value of their firms. Therefore, this study suggests that firms exempted from the profitability requirement of conducting IPOs more closely follow the market timing hypothesis. Keywords: Hot Issue; Market Timing; IPOs; Profit-Exempted; Underpricing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ibf:ijbfre:v:16:y:2022:i:1:p:1-18 Access Statistics for this article The International Journal of Business and Finance Research is currently edited by Terrance Jalbert More articles in The International Journal of Business and Finance Research from The Institute for Business and Finance Research |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.