Do IPOs Affect the Market Price? Evidence from China
58 Pages Posted: 5 Jun 2017
Date Written: January 1, 2017
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: Suggested Citation