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The Underpricing of Infrastructure IPOs: Evidence from China

Author

Listed:
  • Qile Tan
  • Bill Dimovski

Abstract

This study investigates the underpricing of 154 infrastructure IPOs in China from 1993 to 2012. It follows infrastructure IPO studies in Australia and India which report average underpricing returns to subscribers of 3.5% and 25.4% respectively. The average underpricing return for Chinese infrastructure IPOs is substantially higher at 91.1% but interestingly substantially lower than the underpricing of Chinese IPOs generally. The issue size, the offer price, the time delay to listing and the broad market return from the date of the prospectus to the date of listing are helpful in explaining the underpricing of Chinese infrastructure IPOs. Government ownership retention and underwriter reputation do not appear to have much explanatory power.

Suggested Citation

  • Qile Tan & Bill Dimovski, 2013. "The Underpricing of Infrastructure IPOs: Evidence from China," ERES eres2013_74, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2013_74
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    Cited by:

    1. Abdul WAHID & Muhammad Zubair MUMTAZ & Edmund H. MANTELL, 2020. "Short-Run Pricing Performance of Local and Dual Class IPOs in Alternative Investment Market," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 57-74, March.
    2. Qile Tan & William Dimovski & Victor Fang, 2015. "The Underpricing of Infrastructure IPOs: Evidence from China," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-31, December.
    3. Yu-Lun Chen, 2020. "News announcements and price discovery in the RMB–USD market," Review of Quantitative Finance and Accounting, Springer, vol. 54(4), pages 1487-1508, May.
    4. Hon-Wei Leow & Wee-Yeap Lau, 2018. "The Impact of Global Financial Crisis on IPO Underpricing in Malaysian Stock Market," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-17, December.
    5. Sabri Boubaker & Dimitrios Gounopoulos & Antonios Kallias & Konstantinos Kallias, 2017. "Management earnings forecasts and IPO performance: evidence of a regime change," Review of Quantitative Finance and Accounting, Springer, vol. 48(4), pages 1083-1121, May.

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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