An examination of IPO underpricing in the growth enterprise market of Hong Kong

Anna Vong and N. Zhao

Applied Financial Economics, 2008, vol. 18, issue 19, 1539-1547

Abstract: This study examines the first-day returns of initial public offerings listed on the Growth Enterprise Market (GEM) of Hong Kong from its inception until the year of 2005. Results show that GEM, operating under a relaxed set of listing requirements, exhibits a higher underpricing level than that of the Main Board. Such a higher level can be explained by the ex-post volatility of after-market returns, the timing effects and the geographic location (i.e. 'H' SHARES). Both the reputation of underwriters and the signalling role of underpricing show no effect on initial excess returns.

Date: 2008
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DOI: 10.1080/09603100701704256

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