IPO Survival and Institutional Investment

32 Pages Posted: 19 Aug 2014

See all articles by Susanne Espenlaub

Susanne Espenlaub

University of Manchester - Manchester Business School

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Abdul Mohamed

Cranfield University - School of Management

Brahim Saadouni

Alliance Manchester Business School, The University of Manchester

Date Written: August 17, 2014

Abstract

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

Espenlaub, Susanne and Khurshed, Arif and Mohamed, Abdul and Saadouni, Brahim, IPO Survival and Institutional Investment (August 17, 2014). Available at SSRN: https://ssrn.com/abstract=2481855 or http://dx.doi.org/10.2139/ssrn.2481855

Susanne Espenlaub

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Abdul Mohamed

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

Brahim Saadouni (Contact Author)

Alliance Manchester Business School, The University of Manchester ( email )

Crawford House
Oxford Road
Manchester M13 9PL
United Kingdom

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