The Effects of Removing Price Limits: Evidence from Taiwan IPO Stocks

Mei-Hua Liao, Chien-Chih Lin and Yinrou Wang

Emerging Markets Finance and Trade, 2011, vol. 47, issue 0s5, 40-52

Abstract: There have been few studies of the price limits for initial public offering (IPO) stocks. In 2005, the Taiwanese authorities introduced a trading rule that removed the price limit for IPO stocks during their first five days. In this paper, we investigate the influences of this trading rule on the aftermarket. It is shown that, after implementation of the trading rule, the level of aftermarket returns in the first two weeks became lower, the price was adjusted speedily, and the trading volume was increased.

Keywords: public offerings; price limit; underpricing (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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