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The price behaviour of initial public offerings on the Taiwan Stock Exchange

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  • Yen-Sheng Huang

Abstract

The paper examines the stock price behaviour of 311 initial public offerings (IPOs) on the Taiwan Stock Exchange for the period 1971-95. The IPOs are significantly underpriced. The initial risk-adjusted excess return is 42.6% from the listed day until the first non-limit trading day. The initial risk-adjusted return is positively related to the ovesubscription ratio, which is consistent with Rock's model. The aftermarket performance is consistent with the efficient market hypothesis. The cumulative abnormal return estimated by the market model is not statistically significant after the initial trading. Further, the long-run performance of IPOs is not related to the initial risk-adjusted return.

Suggested Citation

  • Yen-Sheng Huang, 1999. "The price behaviour of initial public offerings on the Taiwan Stock Exchange," Applied Financial Economics, Taylor & Francis Journals, vol. 9(2), pages 201-208.
    • Handle: RePEc:taf:apfiec:v:9:y:1999:i:2:p:201-208
    DOI: 10.1080/096031099332465
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    Citations

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    Cited by:

    1. Beat Reber & Caroline Fong, 2006. "Explaining mispricing of initial public offerings in Singapore," Applied Financial Economics, Taylor & Francis Journals, vol. 16(18), pages 1339-1353.
    2. Robert Brooks & Tim Fry & William Dimovski & Sandra Mihajilo, 2009. "A duration analysis of the time from prospectus to listing for Australian initial public offerings," Applied Financial Economics, Taylor & Francis Journals, vol. 19(3), pages 183-190.
    3. Schaub, Mark & Highfield, Michael J., 2006. "Market timing wealth effects of American Depository Receipts: The cases of emerging and developed market issues," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 16(3), pages 270-282, July.
    4. Anna Vong & N. Zhao, 2008. "An examination of IPO underpricing in the growth enterprise market of Hong Kong," Applied Financial Economics, Taylor & Francis Journals, vol. 18(19), pages 1539-1547.
    5. Yong H. Kim & J. Jimmy Yang, 2009. "Effect of Price Limits: Initial Public Offerings versus Seasoned Equities," International Review of Finance, International Review of Finance Ltd., vol. 9(3), pages 295-318, September.
    6. Anna Vong, 2006. "Rate of subscription and after-market volatility in Hong Kong IPOs," Applied Financial Economics, Taylor & Francis Journals, vol. 16(16), pages 1217-1224.
    7. Mark Schaub, 2013. "Long-Run Performance of Emerging Market ADRs: Evidence From Issues Listed on the New York Stock Exchange From 1990 Through 2009," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 5(1), pages 41-54, January.
    8. Radha Shiwakoti & Robert Hudson & Helen Short, 2005. "A study of the initial returns and the aftermarket performance of initial public offerings of demutualized building societies in the UK," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 403-409.
    9. Leo Huang & Michael Chang, 2018. "Why do travel agencies choose to undergo IPOs in Taiwan?," Tourism Economics, , vol. 24(1), pages 79-91, February.
    10. Shikha Bhatia & Balwinder Singh, 2012. "Examining the Performance of IPOs," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 37(3), pages 219-251, August.
    11. Anna Vong & Duarte Trigueiros, 2009. "An empirical extension of Rock's IPO underpricing model to three distinct groups of investors," Applied Financial Economics, Taylor & Francis Journals, vol. 19(15), pages 1257-1268.

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