IPO Survival and Institutional Investment
32 Pages Posted: 19 Aug 2014
Date Written: August 17, 2014
This study examines the survival rates of initial public offerings (IPOs) listed on the Hong Kong stock exchange between 1990 and 2010 and tracked until the end of 2013. The results show that the average survival rates on the Hong Kong market are high compared to other developed markets and the lowest is 78 percent over five years post listing. Furthermore, we find that the IPO firms are exposed to low failure risks even during and after financial crises. Investigating the determinants of survival rates, we find that the proportions of shares allocated to institutional investors and investor demand at the time of listing, along with initial investors’ retained ownership, significantly increase survival rates. In addition, the survival rates are high when the IPO is family controlled and investors have long term investment horizon.
Keywords: survival, IPO, new listings, institutional allocation, demand multiple, Hong Kong
JEL Classification: G39
Suggested Citation: Suggested Citation