IPO Initial Excess Return in an Emerging Market: Evidence from Vietnam’s Stock Exchanges

Shaio Yan Huang, Chao-Hsiung Lee, Lee-Hsien Pan and Bich Hanh Nguyen Thi
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Shaio Yan Huang: Department of Accounting and Information Technology, National Chung Cheng University, Chiayi County 62102, Taiwan
Chao-Hsiung Lee: Department of Finance, National Chung Hsing University, Chiayi County 62102, Taiwan
Lee-Hsien Pan: Division of Business and Management, Keuka College, Keuka Park, New York, USA
Bich Hanh Nguyen Thi: Department of Finance, National Chung Hsing University, Chiayi County 62102, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2016, vol. 19, issue 02, 1-23

Abstract: Using data from 118 firms listed on the Ho Chi Minh and Hanoi Stock Exchanges from January 1, 2006 to June 30, 2010, we find that Vietnamese IPOs, which face high government regulation, are on average 1.92% underpriced during the initial 30-day trading period. Among these firms, the initial excess returns are 3.49%, 2.68%, and 2.27% for the manufacturing, information, and service industries, respectively, possibly due to favorable government policy toward industrialization. Moreover, the government’s policies regarding trade liberalization, state-owned enterprise privatization, and export-led industrialization are positively associated with IPO underpricing during the initial trading period. Consequently, IPO initial excess return is more pronounced in 2007, when Vietnam joined the World Trade Organization.

Keywords: IPOs; SOEs; Vietnam stock exchange; initial excess return (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1142/S0219091516500119

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