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IPO Underpricing After the 2008 Financial Crisis: A Study of the Chinese Stock Markets

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  • Rui Li

    (School of Economics, Peking University, Beijing 100871, China)

  • Wei Liu

    (Discipline of International Business, The University of Sydney, Sydney 2006, Australia
    School of Business, Wuyi University, Nanping 354300, China)

  • Yong Liu

    (Political Economics Institute, Wuhan University of Science and Technology, Wuhan 430065, China)

  • Sang-Bing Tsai

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528402, China)

Abstract

A firm’s capability of raising funding is closely related to its sustainable development. With a more efficient allocation of funding among the whole society, social resources will be better utilized. Initial Public Offering (IPO) can indeed be an effective means of raising capital for corporate ventures. Using 1069 firms which completed IPOs on Chinese stock exchanges between 1st January 2004 and 1st January 2013, we investigate the difference in IPO underpricing before and after the 2008 financial crisis. Based on OLS regression models, we find that the IPOs are less underpriced in the post-crisis period. We examine the moderating effects of firm size on the difference in IPO underpricing between pre- and post-crisis periods, finding that small firms experienced less IPO underpricing than large firms after the financial crisis. After applying different model specifications such as Robust and OProbit regressions, the results remain consistent. Our study contributes to understanding the dynamics and influences of the financial crisis on firms’ IPO cost from the perspective of information asymmetry.

Suggested Citation

  • Rui Li & Wei Liu & Yong Liu & Sang-Bing Tsai, 2018. "IPO Underpricing After the 2008 Financial Crisis: A Study of the Chinese Stock Markets," Sustainability, MDPI, vol. 10(8), pages 1-13, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2844-:d:163080
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    6. Xiao Ma & Zhe Zhang & Yan Han & Xiao-Guang Yue, 2019. "Sustainable Policy Dynamics—A Study on the Recent “Bust” of Foreign Residential Real Estate Investment in Sydney," Sustainability, MDPI, vol. 11(20), pages 1-20, October.
    7. Juyoun Ryoo & Cheolwoo Lee & Jin Q Jeon, 2020. "Sustainability of Analyst Recommendations in Multiple Lead Underwriter IPOs," Sustainability, MDPI, vol. 12(5), pages 1-36, March.
    8. Na-Youn Kim, 2019. "Do Reputable Underwriters Affect the Sustainability of Newly Listed Firms? Evidence from South Korea," Sustainability, MDPI, vol. 11(9), pages 1-19, May.
    9. Emanuele Teti & Ilaria Montefusco, 2022. "Corporate governance and IPO underpricing: evidence from the italian market," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(3), pages 851-889, September.
    10. Baogui Xin & Wei Peng & Yekyung Kwon & Yanqin Liu, 2019. "Modeling, discretization, and hyperchaos detection of conformable derivative approach to a financial system with market confidence and ethics risk," Papers 1903.12267, arXiv.org, revised Apr 2019.

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