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IPO flipping activity in China and its implications

Maher Kooli and Xiaozhou Zhou

Pacific-Basin Finance Journal, 2020, vol. 61, issue C

Abstract: Initial public offering (IPO) flippers are investors who are initially allocated shares at the offer price and immediately resell them. Using a large sample of 2043 IPOs in China from January 1995 to November 2012, we find that on average, flipping accounts for 65.99% of total negotiable shares. We also find that neither institutional investors' participation nor the adoption of the bookbuilding approach in China does dissuade retail investors to behave as active flippers. Further, we examine the impact of the first-day flipping activity on the subsequent IPO performance and find that IPOs with institutional investors' participation attract flippers and exhibit the worst long-term performance.

Keywords: Initial public offerings; Flipping; Long-term performance (search for similar items in EconPapers)
JEL-codes: G14 G30 G32 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.pacfin.2020.101345

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