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The determinants and consequences of IPOs in a regulated economy: Evidence from China

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  • Fang, Junxiong
  • Shi, Haina
  • Xu, Haoping

Abstract

Using a sample of 156 monthly returns over the period of 1996–2008, we find a positive relation between the monthly issuing size and prior market returns, suggesting that the government decides the timing and the size of issuances based on prior market conditions. Different from previous findings, our study finds no evidence of decline in subsequent market returns after initial public offerings (IPOs). However, IPO issuance has a significantly negative impact on the return momentum effect, whereas the degree of impact is indifferent to the issuing size. We conclude that the overall mild impact on the subsequent market results from the government's regulation of the IPO market.

Suggested Citation

  • Fang, Junxiong & Shi, Haina & Xu, Haoping, 2012. "The determinants and consequences of IPOs in a regulated economy: Evidence from China," Journal of Multinational Financial Management, Elsevier, vol. 22(4), pages 131-150.
    • Handle: RePEc:eee:mulfin:v:22:y:2012:i:4:p:131-150
    DOI: 10.1016/j.mulfin.2012.06.002
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    Cited by:

    1. Li, Yuanpeng & Shi, Haina & Zhou, Yi, 2021. "The influence of the media on government decisions: Evidence from IPOs in China," Journal of Corporate Finance, Elsevier, vol. 70(C).
    2. Fabio Bertoni & Matteo Bonaventura & Giancarlo Giudici, 2013. "The allotment of IPO shares: placing strategies between retail versus institutional investors," Chapters, in: Mario Levis & Silvio Vismara (ed.), Handbook of Research on IPOs, chapter 10, pages 207-218, Edward Elgar Publishing.
    3. Chen, Chao & Shi, Haina & Xu, Haoping, 2014. "The IPO underwriting market share in China: Do ownership and quality matter?," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 177-189.

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    More about this item

    Keywords

    Government regulation; IPO; Issuing size; Market return;
    All these keywords.

    JEL classification:

    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • N2 - Economic History - - Financial Markets and Institutions

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