Cross-Sectional Determinants of Post-IPO Stock Performance: Evidence from China

23 Pages Posted: 24 Aug 2010

See all articles by Xin (Simba) Chang

Xin (Simba) Chang

Nanyang Business School, Nanyang Technological University

Shi Hua Lin

affiliation not provided to SSRN

Lewis Tam

Faculty of Business Administration, University of Macau

George Wong

Hong Kong Polytechnic University

Abstract

This paper examines the cross-sectional determinants of post-IPO long-term stock returns in China. We document that the aftermarket P/E ratio has the most robust negative association with post-IPO stock returns. The negative relation indicates that the market corrects the aftermarket overvaluation of IPO firms in the long run. Underwriter reputation has a positive effect on post-IPO stock returns, while board size has a negative impact, consistent with the views that reputable underwriters mitigate the information asymmetry in IPO pricing and over-sized boards reduce the effectiveness of corporate governance. However, we find little evidence indicating that the equity ownership structure is significantly associated with post-IPO stock returns.

Suggested Citation

Chang, Xin and Lin, Shi Hua and Tam, Lewis and Wong, George, Cross-Sectional Determinants of Post-IPO Stock Performance: Evidence from China. Accounting & Finance, Vol. 50, Issue 3, pp. 581-603, September 2010. Available at SSRN: https://ssrn.com/abstract=1661363 or http://dx.doi.org/10.1111/j.1467-629X.2009.00333.x

Xin Chang

Nanyang Business School, Nanyang Technological University ( email )

S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore

HOME PAGE: http://www.ntu.edu.sg/home/changxin

Shi Hua Lin

affiliation not provided to SSRN

Lewis Tam

Faculty of Business Administration, University of Macau ( email )

Room E22-4055, University of Macau
Avenida da Universidade
Taipa
Macau

George Wong

Hong Kong Polytechnic University ( email )

Hung Hom, Kowloon
Hong Kong

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