Empirical Study on the Performance of Initial Public Offerings in China

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We study the long-run performance of 166 IPOs listed on China’s Shanghai Stock Exchanges from 2000 to 2002. We find that the average market-adjusted cumulative return and buy-and-hold return over the three years after listing are -32.02% and -20.88%, which are both significantly negative. What’s more, as an additional robustness check, we cal-culate wealth relatives. One year after listing, WR less than 1 and we obtain a three-year wealth relative of 0.6826, consistent with the CAR and BHAR estimates. We then use a cross-sectional analysis to explain the long-run underper-formance of Chinese IPOs. The results show that the aftermarket performance is positive after listing (6 months) but thereafter returns decline. Buying A-share IPOs immediately after listing and holding the investment for three years results in negative returns and wealth relatives less than one.

Cite this paper

P. Liang, “Empirical Study on the Performance of Initial Public Offerings in China,” Journal of Service Science and Management, Vol. 1 No. 2, 2008, pp. 135-142. doi: 10.4236/jssm.2008.12014.


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