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Sponsor Co-investment, inquiry divergence, and IPO pricing efficiency

Author

Listed:
  • Dong, Xiuliang
  • Wang, Yiqun
  • Zhang, Jiaming
  • Liu, Jianing

Abstract

This paper measures the initial public offering (IPO) pricing efficiency of China's Sci-Tech Innovation Board and the growth enterprise market under the registration-based IPO system, with a novel focus on the mandatory sponsor co-investment system. Our findings reveal that this system improves IPO pricing efficiency and is crucial in mitigating capital constraints, overshadowing the influence of sponsor reputation. Additionally, the co-investment ratio reduces inquiry divergence among institutional investors, enhancing pricing efficiency. This study provides new insights into China's evolving IPO market dynamics and its regulatory mechanisms.

Suggested Citation

  • Dong, Xiuliang & Wang, Yiqun & Zhang, Jiaming & Liu, Jianing, 2024. "Sponsor Co-investment, inquiry divergence, and IPO pricing efficiency," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612323013235
    DOI: 10.1016/j.frl.2023.104951
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    Keywords

    Sponsor co-investment system; The co-investment ratio; IPO pricing efficiency; Inquiry divergence;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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