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What Explains the High Returns to the IPOs of China's A‐Shares?

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  • Sheng‐gang Yang
  • Tian‐yi Wang
  • Shun‐cai Jiang

Abstract

This paper investigates the initial returns of Chinese A‐share initial public offerings (IPOs) under the split‐share structure before 2005. The split‐share structure refers to the coexistence of shareholders of tradable shares and shareholders of non‐tradable shares. The average initial return is much higher than those of other countries, even though this has been declining. We argue that the split‐share structure causes the initial returns of Chinese IPOs to be very high level in the beginning, and then to decrease slowly because of the institutional transition and the path‐dependent characteristics. With the reform of non‐tradable share offerings, the average initial return of Chinese IPOs is likely to fall.

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  • Sheng‐gang Yang & Tian‐yi Wang & Shun‐cai Jiang, 2007. "What Explains the High Returns to the IPOs of China's A‐Shares?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(4), pages 297-308.
    • Handle: RePEc:taf:jecprf:v:10:y:2007:i:4:p:297-308
    DOI: 10.1080/17487870701552012
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    Cited by:

    1. Jen-Sin Lee & Yue Li & Xin Hu & Qi-An Lu, 2017. "The Relation between Initial Returns and Audits by the Big Four Accounting Firms," Applied Economics and Finance, Redfame publishing, vol. 4(4), pages 44-58, July.

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