The Performance and Long-Run Characteristics of the Chinese IPO Market

Jing Chi () and Carol Padgett ()
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Jing Chi: ICMA Centre, University of Reading
Carol Padgett: ICMA Centre, University of Reading

ICMA Centre Discussion Papers in Finance from Henley Business School, University of Reading

Abstract: We study the short-run and long-run performance of Chinese privatization initial public offerings (PIPOs), using data for 340 and 409 new issues on the Shanghai and Shenzhen Stock Exchanges respectively, from 1 January 1996 through 31 December 1997. The average market-adjusted initial return is found to be 127.31%, and the initial returns on both stock exchanges are not significantly different from each other. The average market-adjusted buy and hold return over the three years after listing is 10.26%, which is significantly different from zero at the 1% level. We then use cross-sectional analysis to explain the long-run supernormal performance of Chinese PIPOs, and find that government ownership, the offering size and the feature of belonging to a high-tech industry are the main determinants of the long-run performance. In addition, firms that perform better in the long-run tend to make more Seasoned Equity Offerings (SEOs), and the underpricing of IPOs is negatively related to their long-run performance.

Keywords: IPO; underpricing; long-run performance; government ownership; offering size; high tech industry; China (search for similar items in EconPapers)
JEL-codes: G15 G32 P21 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2002-01, Revised 2002-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Pacific Economic Review December 2005, 10:4, 451-469

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