The Performance and Long-Run Characteristics of the Chinese IPO Market

U of Reading, ISMA Centre Discussion Paper No. 2002-09

35 Pages Posted: 14 May 2002

See all articles by Carol Padgett

Carol Padgett

University of Reading - ICMA Centre

Jing Chi

Massey University - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: April 23, 2002

Abstract

We study the short-run and long-run performance of Chinese privatization initial public offerings (PIPOs), using data for 340 and 409 new issues on the Shanghai and Shenzhen Stock Exchanges respectively, from 1 January 1996 through 31 December 1997. The average market-adjusted initial return is found to be 127.31%, and the initial returns on both stock exchanges are not significantly different from each other. The average market-adjusted buy and hold return over the three years after listing is 10.26%, which is significantly different from zero at the 1% level. We then use cross-sectional analysis to explain the long-run supernormal performance of Chinese PIPOs, and find that government ownership, the offering size and the feature of belonging to a high-tech industry are the main determinants of the long-run performance. In addition, firms that perform better in the long-run tend to make more Seasoned Equity Offerings (SEOs), and the underpricing of IPOs is negatively related to their long-run performance.

Keywords: IPO, underpricing, long-run performance, government ownership, offering size, high-tech industry, China

JEL Classification: G32, G15, P21

Suggested Citation

Padgett, Carol and Chi, Jing, The Performance and Long-Run Characteristics of the Chinese IPO Market (April 23, 2002). U of Reading, ISMA Centre Discussion Paper No. 2002-09. Available at SSRN: https://ssrn.com/abstract=309931 or http://dx.doi.org/10.2139/ssrn.309931

Carol Padgett

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

Jing Chi (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North,, 4442
New Zealand
+64 6 3569099 Ext. 84048 (Phone)
+64 6 350 5651 (Fax)

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