Do IPOs Affect the Market Price? Evidence from China

58 Pages Posted: 5 Jun 2017

See all articles by Song Shi

Song Shi

Fudan University - School of Economics

Qian Sun

Fudan University

Xin Zhang

Fudan University - School of Management

Date Written: January 1, 2017

Abstract

We examine whether sizable initial public offerings (IPOs) affect the whole market. Using a Chinese IPO sample, we find robust evidence that sizable IPOs do depress the market price on not only the listing day but also the offering (subscription) day. The impact on the market is negatively correlated with the IPO size on the listing day. However, the IPO impact is largely transitory. The China Securities Regulatory Commission (CSRC) often places a moratorium on IPOs to support the market, which seems ineffective as the negative IPO effect is transitory and moratoriums are not perceived as good news.

Keywords: IPO, Issuing Size, Market, Price Pressure, Price Reversal

JEL Classification: G!2, G15

Suggested Citation

Shi, Song and Sun, Qian and Zhang, Xin, Do IPOs Affect the Market Price? Evidence from China (January 1, 2017). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2979859 or http://dx.doi.org/10.2139/ssrn.2979859

Song Shi

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Qian Sun

Fudan University ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China
86 21 25011094 (Phone)

Xin Zhang (Contact Author)

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

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