IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v59y2024i1p1-38_1.html

Initial Public Offerings Chinese Style

Author

Listed:
  • Qian, Yiming
  • Ritter, Jay R.
  • Shao, Xinjian

Abstract

This article provides a survey of China’s initial public offering (IPO) market, focusing on IPO pricing, bids and allocation, and aftermarket trading. We show that strict regulations result in suppressed IPO offer prices and high initial returns, causing a high cost of going public. Investors treat IPOs as lotteries with extremely high short-term returns, with little attention to the long term. The auction selling method, however, works in the way it is supposed to. Mutual funds bid in a more informative way than other investors, and their advantages are unlikely to be due to underwriters’ preferential treatment. We also discuss the latest registration-system reform.

Suggested Citation

  • Qian, Yiming & Ritter, Jay R. & Shao, Xinjian, 2024. "Initial Public Offerings Chinese Style," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 59(1), pages 1-38, February.
    • Handle: RePEc:cup:jfinqa:v:59:y:2024:i:1:p:1-38_1
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S002210902200134X/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shenghao Gao & Peyman Khezr & Armin Pourkhanali, 2024. "Uniform price auctions with pre-announced revenue targets: Evidence from China's SEOs," Papers 2410.00063, arXiv.org.
    2. Qian, Yiming & Shao, Xinjian & Liao, Jingchi, 2024. "Pre-IPO hype by affiliated analysts: Motives and consequences," Journal of Corporate Finance, Elsevier, vol. 89(C).
    3. Ge, Guoqing & Xue, Jian & Zhang, Qian, 2025. "Syndicate partner composition of governmental venture capital firms: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    4. Fan, Xinyue & Tang, Zishen & Huang, Wenjie & Yang, Kai, 2025. "Ownership concentration and corporate greenwashing in China's capital markets: Based on a multi-actors perspective," Pacific-Basin Finance Journal, Elsevier, vol. 89(C).
    5. Jian Chen & Ahmad Haboub & Ali Khan & Syed Mahmud, 2025. "Investor clientele and intraday patterns in the cross section of stock returns," Review of Quantitative Finance and Accounting, Springer, vol. 64(2), pages 757-797, February.
    6. Ma, Yue & Li, Yongqing & Li, Zijie, 2025. "Are investors influenced by the textual information in IPO prospectuses? Examining IPO pricing based on textual information management," International Review of Financial Analysis, Elsevier, vol. 107(C).
    7. Fei, Yue & Hege, Ulrich & Jia, Xiao, 2026. "IPO Reform and Venture Capital: Evidence from China”," TSE Working Papers 26-1732, Toulouse School of Economics (TSE).
    8. Sun, Qian & Gao, Shenghao & Wu, Di & Chan, Kam C. & Cheng, Xiaoke, 2024. "Pre-IPO dividend puzzle: Reaction to IPO underpricing or post-IPO lockup? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    9. Cao, Aochen & Lu, Huaixin & Zhang, Jianyang & Wang, Zidong, 2025. "How does sponsor Co-investment distort institutional investor bidding? Evidence from China," Finance Research Letters, Elsevier, vol. 84(C).
    10. Cao, Xiaping & Wang, Yintian & Wen, Yuxi, 2025. "Collusive bidding: Evidence from China’s IPO bookbuilding mechanism reform," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    11. Chen, Yangfa & Jiang, Ji & Liu, Jie & Liu, Xiao & Wu, Weili, 2025. "Registration system reform, information environment, and market manipulation," Journal of Corporate Finance, Elsevier, vol. 93(C).
    12. Guo, Zhaorui & Sun, Li & Chan, Kam C., 2025. "CEO hometown ties and initial public offering underpricing: Evidence from China's listed firms," International Review of Financial Analysis, Elsevier, vol. 97(C).
    13. Jingbin He & Bo Liu & Hong Zou, 2025. "Quid Pro Quo in IPO Auctions," Journal of Business Ethics, Springer, vol. 199(2), pages 413-436, June.
    14. He, Zhiwei & Liu, Wei & Shao, Xuefeng & Xu, Yahui, 2025. "From headlines to IPO: How AI-related media coverage of companies and leadership influences IPO durations," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    15. Wu, Di & Cheng, Xiaoke & Chan, Kam C. & Gao, Shenghao, 2025. "Unintended consequence of high bid price exclusion in IPO auctions: Evidence from China," Journal of Financial Markets, Elsevier, vol. 72(C).
    16. Gounopoulos, Dimitrios & Loukopoulos, Georgios & Loukopoulos, Panagiotis & Zhang, Yu, 2024. "Do CFO career concerns matter? Evidence from IPO financial reporting outcomes," Journal of Corporate Finance, Elsevier, vol. 87(C).
    17. Cheng, Zijian & Li, Tianze & Liu, Zhangxin (Frank), 2025. "Unveiling the veil: Identifying potential shell firms using machine learning approaches," Pacific-Basin Finance Journal, Elsevier, vol. 92(C).
    18. Celine (Yue) Fei & Ulrich Hege & Xiao Jia, 2026. "IPO Reform and Venture Capital: Evidence from China," CRC TR 224 Discussion Paper Series crctr224_2025_736, University of Bonn and University of Mannheim, Germany.
    19. Li, Qinyang & He, Liping & Gou, Xiao & Ren, Yao, 2024. "The registration-based IPO reform and the cost of equity capital: evidence from China," Finance Research Letters, Elsevier, vol. 67(PA).
    20. Tang, Siyuan & Luo, Runmei, 2024. "Price deregulation and investors’ IPO speculation: Evidence from Chinese registration system reform," Research in International Business and Finance, Elsevier, vol. 71(C).
    21. Wei Zhang & Xinyu Li & Guanying Wang & Xiangqian Li, 2026. "Environmental pollution and IPO pricing efficiency: evidence from heavily polluting firms in China," Review of Quantitative Finance and Accounting, Springer, vol. 66(2), pages 757-798, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:59:y:2024:i:1:p:1-38_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.