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IPO policy and IPO underpricing: Evidence from the registration-based IPO reform in China

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  • Li, Jiahui
  • Li, Rui

Abstract

Based on difference-in-differences method, this document investigates the effects of IPO policies on price efficiency of the Chinese market IPOs. Different from the existing literatures, we document that market-oriented reform even significantly magnifies the initial returns, and no significant effects are detected in longer periods. We argue that registration-based IPO system may amplify the aggressive speculation on the newly listed stocks, which blows up the after-market prices.

Suggested Citation

  • Li, Jiahui & Li, Rui, 2022. "IPO policy and IPO underpricing: Evidence from the registration-based IPO reform in China," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005602
    DOI: 10.1016/j.frl.2021.102623
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    References listed on IDEAS

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    1. Gao, Yan, 2010. "What comprises IPO initial returns: Evidence from the Chinese market," Pacific-Basin Finance Journal, Elsevier, vol. 18(1), pages 77-89, January.
    2. Tian, Lihui, 2011. "Regulatory underpricing: Determinants of Chinese extreme IPO returns," Journal of Empirical Finance, Elsevier, vol. 18(1), pages 78-90, January.
    3. Cheung, Yan-leung & OUYANG, Zhiwei & TAN, Weiqiang, 2009. "How regulatory changes affect IPO underpricing in China," China Economic Review, Elsevier, vol. 20(4), pages 692-702, December.
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    Cited by:

    1. Liu, Xiaoqun & Zhang, Yuchen & Tian, Mengqiao & Chao, Youcong, 2023. "Financial distress and jump tail risk: Evidence from China's listed companies," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 316-336.
    2. Zhang, Shengpeng & Li, Yaokuang & He, Yu & Liang, Ruixin, 2024. "Do vocal cues matter in information disclosure? Evidence from IPO online roadshows in the SSE STAR market," International Review of Financial Analysis, Elsevier, vol. 93(C).
    3. Wang, Shuangjin & Wang, Puxuan & Cebula, Richard J. & Foley, Maggie, 2023. "Board characteristics and IPO underpricing in China: The perspective of moderating effect of venture capitalists," Finance Research Letters, Elsevier, vol. 52(C).

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