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Long-Run Outperformance of Chinese Initial Public Offerings

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  • Jing Chi
  • Chunping Wang
  • Martin Young

Abstract

The long-run performance of Chinese IPOs is investigated using 897 A-share IPOs listed on the two Chinese stock exchanges from 1996 to 2002. Significantly positive abnormal returns are found up to three years after listing by using the cumulative abnormal return measure, the buy-and-hold abnormal return measure, and the Fama-French three-factor model. Since the series of reforms in 1999-2000, outperformance has shown clear signs of decreasing. Cross-sectional analysis supports the view that the reasons for the outperformance of IPOs are the privatized nature of the new issues and the inequality of supply and demand. However, the uncertainty of the reforms reducing state ownership has made investing in IPOs less attractive in the long run.

Suggested Citation

  • Jing Chi & Chunping Wang & Martin Young, 2010. "Long-Run Outperformance of Chinese Initial Public Offerings," Chinese Economy, Taylor & Francis Journals, vol. 43(5), pages 62-88, January.
    • Handle: RePEc:mes:chinec:v:43:y:2010:i:5:p:62-88
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    Cited by:

    1. Alberto Dreassi & Massimiliano Kaucic & Giorgio Valentinuz, 2017. "The Information Content Of Earnings Announcements In The European Insurance Market: An Event Study Analysis," Eurasian Journal of Business and Management, Eurasian Publications, vol. 5(3), pages 1-16.
    2. Charlie X. Cai & Paul B. McGuinness & Qi Zhang, 2018. "Credit scores and the performance of newly-listed stocks: an exploration of the Chinese A-share market," Review of Quantitative Finance and Accounting, Springer, vol. 51(1), pages 79-111, July.
    3. Otchere, Isaac & Vong, Anna P.I., 2016. "Venture capitalist participation and the performance of Chinese IPOs," Emerging Markets Review, Elsevier, vol. 29(C), pages 226-245.
    4. Nguyen Van Tan & Ninh Thi Trang, 2023. "The long-run performance of initial public offerings: evidence from a transition economy," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 13(5), pages 574-591.
    5. Sanjay Dhamija & Ravinder Kumar Arora, 2017. "Determinants of Long-run Performance of Initial Public Offerings: Evidence from India," Vision, , vol. 21(1), pages 35-45, March.

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