Evolution of Pricing Efficiency for Chinese IPOs with Regulatory Reforms

Qi Deng, Zhong-guo Zhou, Dingyi Chen and Ren Gao ()
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Qi Deng: Department of Economics, Gettysburg College, PA, USA2Hubei University of Automotive Technology, P. R. China
Zhong-guo Zhou: California State University Northridge, Northridge, CA, USA
Dingyi Chen: Hubei University of Automotive Technology, P. R. China4School of Business, The University of Queensland, QLD, AU5School of Economics and Management, China University of Geosciences, P. R. China
Ren Gao: Hubei University of Automotive Technology, P. R. China

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2025, vol. 28, issue 02, 1-53

Abstract: We review the evolution of Chinese IPO markets with a special focus on the ChiNext board that is mainly for the “entrepreneurial†type of ventures in China, such as hi-tech and fast-growing firms to raise capital. Since its inception in 2009, ChiNext IPOs are priced by the “Chinese-style†bookbuilding mechanism with unique online and offline share allocations. The board has gone through two regulatory regimes, from an approval system to a registration one. In addition, there are numerous sets of listing day trading restrictions, from trading curbs and suspensions to hard return caps, and finally to no restrictions at all over the first 5 trading days. The evaluation aims to increase IPO market efficiency. From a mainly value-driven pricing under an approval regime to a largely demand-driven pricing under a registration regime, ChiNext has been evolving from an immature IPO market with erratic trading and manipulations towards a more transparent, efficient, market-oriented, and investor-protecting IPO market. Reviewing the history of ChiNext board and related lessons sheds valuable insights for other emerging IPO markets worldwide that attempt to duplicate the success of NASDAQ board in the US.

Keywords: Evolution of ChiNext IPOs; regulatory reforms; IPO pricing and underpricing; pricing efficiency (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0219091525500109

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