An Empirical Examination of IPO Underpricing in the Chinese A-Share Market
Research in the literature shows that initial public offerings (IPOs) of common stocks are systematically priced at a discount to their subsequent initial trading price. The large underpricing magnitude in the Chinese IPO market has attracted much attention. We consider three hypotheses that may exp...
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2006
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sg-smu-ink.soe_research-14412019-05-20T06:55:59Z An Empirical Examination of IPO Underpricing in the Chinese A-Share Market YU, Ting TSE, Yiu Kuen Research in the literature shows that initial public offerings (IPOs) of common stocks are systematically priced at a discount to their subsequent initial trading price. The large underpricing magnitude in the Chinese IPO market has attracted much attention. We consider three hypotheses that may explain the IPO underpricing in China. These are the winner's curse hypothesis, the ex ante uncertainty hypothesis and the signaling hypothesis. Among these hypotheses, the winner's curse hypothesis has not been tested in the Chinese market. Using IPO data for online fixed-price offerings from November 1995 to December 1998, our results show that the winner's curse hypothesis is the main reason for the high IPO underpricing in China. The signaling hypothesis is not empirically supported in the Chinese market during the sample period. 2006-01-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/soe_research/442 info:doi/10.1016/j.chieco.2005.07.001 https://ink.library.smu.edu.sg/context/soe_research/article/1441/viewcontent/IPO_underpricing_A_share_2006_afv.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Economics eng Institutional Knowledge at Singapore Management University IPO signaling strategic underpricing winner’s curse China stock market Asian Studies Econometrics Finance |
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IPO signaling strategic underpricing winner’s curse China stock market Asian Studies Econometrics Finance YU, Ting TSE, Yiu Kuen An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
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Research in the literature shows that initial public offerings (IPOs) of common stocks are systematically priced at a discount to their subsequent initial trading price. The large underpricing magnitude in the Chinese IPO market has attracted much attention. We consider three hypotheses that may explain the IPO underpricing in China. These are the winner's curse hypothesis, the ex ante uncertainty hypothesis and the signaling hypothesis. Among these hypotheses, the winner's curse hypothesis has not been tested in the Chinese market. Using IPO data for online fixed-price offerings from November 1995 to December 1998, our results show that the winner's curse hypothesis is the main reason for the high IPO underpricing in China. The signaling hypothesis is not empirically supported in the Chinese market during the sample period. |
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text |
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YU, Ting TSE, Yiu Kuen |
author_facet |
YU, Ting TSE, Yiu Kuen |
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YU, Ting |
title |
An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
title_short |
An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
title_full |
An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
title_fullStr |
An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
title_full_unstemmed |
An Empirical Examination of IPO Underpricing in the Chinese A-Share Market |
title_sort |
empirical examination of ipo underpricing in the chinese a-share market |
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Institutional Knowledge at Singapore Management University |
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2006 |
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https://ink.library.smu.edu.sg/soe_research/442 https://ink.library.smu.edu.sg/context/soe_research/article/1441/viewcontent/IPO_underpricing_A_share_2006_afv.pdf |
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