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Do IPOs matter for price limits? Evidence from Taiwan

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  • Ni, Yensen
  • Huang, Paoyu

Abstract

Given that the price limit hit is prominently displayed on the screen of the Taiwan Stock Exchange (TWSE), we explore whether price limits occur in initial public offering (IPO) firms according to the assumption that the sentiments of investors tend to be aroused by firms issuing IPOs and the price limit hit. Results reveal that price limits often occur in IPO stocks. The above phenomena do not only occur during the IPO issuing year, but may also be extended to the following year. We infer that several IPO firms tend to manipulate share prices, especially for technology and high-underpricing IPO firms. The results of this study may be interpreted from the sentiments of investors via the viewpoint of behavioral finance.

Suggested Citation

  • Ni, Yensen & Huang, Paoyu, 2015. "Do IPOs matter for price limits? Evidence from Taiwan," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 74-83.
    • Handle: RePEc:eee:quaeco:v:58:y:2015:i:c:p:74-83
    DOI: 10.1016/j.qref.2015.01.008
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    Cited by:

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    3. Ni, Yensen & Huang, Paoyu & Chiang, Pinhui & Liao, Yulu, 2019. "Cash flow statements and firm value: Evidence from Taiwan," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 280-290.

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    More about this item

    Keywords

    Price limit; IPO; Investors’ sentiments; Corporate governance; Board structure;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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