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Title: | Under-pricing and long-run performance of IPOs in China | Authors: | ZHANG FENG | Keywords: | Initial Public Offerings (IPOs); Under-pricing; Long-run Performance; China Stock Market; IPO Valuation. | Issue Date: | 14-Oct-2004 | Citation: | ZHANG FENG (2004-10-14). Under-pricing and long-run performance of IPOs in China. ScholarBank@NUS Repository. | Abstract: | We examine the under-pricing and long-run performance of 230 A-share IPOs issued from 1997 to 1998 in China using comparable firm multiples. We find that the A-share IPOs are severely under-priced and under-valued by about 50% by issuers and underwriters at the offer. We also find positive relationship between magnitudes of under-valuation and initial return of IPO, thereby implying that under-valuation may cause under-pricing. In contrast with under-valuation by issuers and underwriters, investors tend to over-valuate IPOs on the listing day. This may indicate that under-valuation by issuers and underwriters and over-valuation by investors jointly causes the severe under-pricing of IPOs. Furthermore, we detect a 30% out-performance of IPOs with respect to the market after 36 months of listing. But IPOs under-perform their matching firms by 25% after 36 months of listing, and those IPOs over-valued by investors on the listing day under-perform those under-valued IPOs in the long-run. | URI: | http://scholarbank.nus.edu.sg/handle/10635/14263 |
Appears in Collections: | Master's Theses (Open) |
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