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Title: Under-pricing and long-term performance of IPOs in China
Authors: Chan, Kalok
Wei, John K. C.
Wang, Junbo
Keywords: Under-pricing
Issue Date: 14-Dec-2001
Abstract: We study the under-pricing and long-term performance of 570 A-share IPOs and 39 B-share IPOs issued in China. The average under-pricing for A-share IPOs is 178%, while the average under-pricing for B-share IPOs is only 11.6%. Some institutional characteristics in China could explain the under-pricing of A-share IPOs. The under-pricing is positively related to the number of days between the offering and the listing and the number of stock investors in the province from which the IPO comes, but it is negatively related to the number of shares being issued. In contrast, none of these characteristics explain the under-pricing of B-share IPOs. In the long-run, there is no stock price underperformance of either A-share and B-share IPOs. Furthermore, the stock price performance is partially related to the operating performance of the company.
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