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IPO flipping activity in China and its implications

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  • Kooli, Maher
  • Zhou, Xiaozhou

Abstract

Initial public offering (IPO) flippers are investors who are initially allocated shares at the offer price and immediately resell them. Using a large sample of 2043 IPOs in China from January 1995 to November 2012, we find that on average, flipping accounts for 65.99% of total negotiable shares. We also find that neither institutional investors' participation nor the adoption of the bookbuilding approach in China does dissuade retail investors to behave as active flippers. Further, we examine the impact of the first-day flipping activity on the subsequent IPO performance and find that IPOs with institutional investors' participation attract flippers and exhibit the worst long-term performance.

Suggested Citation

  • Kooli, Maher & Zhou, Xiaozhou, 2020. "IPO flipping activity in China and its implications," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:pacfin:v:61:y:2020:i:c:s0927538x19307061
    DOI: 10.1016/j.pacfin.2020.101345
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    1. Zhang, Zhi & Zhang, Di & Jiang, Senyang & Li, Ao & Yu, Wei, 2023. "The effect of language on IPO underpricing: Evidence from a multinational research," International Review of Financial Analysis, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Initial public offerings; Flipping; Long-term performance;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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