An Examination of the Underpricing of H-Share IPOs in Hong Kong

2010 ◽  
Vol 13 (04) ◽  
pp. 559-582 ◽  
Author(s):  
Terence Tai-Leung Chong ◽  
Shuo Yuan ◽  
Isabel Kit-Ming Yan
Keyword(s):  
Growth Rate ◽  
Hong Kong ◽  
Initial Public Offerings ◽  
Ipo Underpricing ◽  
Market Conditions ◽  
Public Offerings ◽  
H Share

The main purpose of this paper is to study the empirical determinants of the underpricing of H-share initial public offerings (IPOs) during the 1993–2003 period. A special characteristic of H-shares is that they are shares of companies incorporated in China, but are also listed abroad. Our estimates indicate that the average IPO underpricing level of H-shares was about 16.8%. We find that the conventional explanations for the worldwide IPO underpricing are not adequate in explaining the underpricing level of H-shares. Some new factors that are important in explaining the underpricing phenomenon in H-shares are identified. We show that the degree of IPO underpricing is positively associated with market conditions prior to issuance. It is also negatively related to the range of the issuing prices as well as to the growth rate of historical profits. In addition, it is found that firms cross-listed in Hong Kong and America have higher underpricing levels.

The Underpricing of Initial Public Offerings in the Philippines from 1987 to 1997

1999 ◽  
Vol 02 (03) ◽  
pp. 285-300 ◽  
Author(s):  
Michael J. Sullivan ◽  
Angelo A. Unite
Keyword(s):  
Initial Public Offerings ◽  
The Philippines ◽  
Firm Age ◽  
Ipo Underpricing ◽  
Market Conditions ◽  
Public Offerings ◽  
Regulatory Policies ◽  
Size Firm

In this paper we report returns for initial public offerings (IPOs) in the Philippines and investigate some characteristics found in other countries to affect returns, specifically offer size, firm age, and industry grouping. For a sample of 104 IPOs during the 11-year period 1987 through 1997, we find average initial returns of 22.69 percent. We do not find that offer size, firm age, or industry groupings affect IPO underpricing and conclude from our findings that underwriters who price Philippine IPOs face different regulatory policies, contractual mechanisms, market conditions than those present in other markets.

IPO Underpricing: A Meta-Analysis and Research Synthesis

2003 ◽  
Vol 27 (3) ◽  
pp. 271-295 ◽  
Author(s):  
Catherine M. Daily ◽  
S. Trevis Certo ◽  
Dan R. Dalton ◽  
Rungpen Roengpitya
Keyword(s):  
Initial Public Offerings ◽  
Meta Analysis ◽  
Research Synthesis ◽  
Future Research ◽  
Popular Press ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Factors Associated ◽  
Significant Relationships ◽  
Dot Com

Initial public offerings (IPOs) have been a prominent focus of academic and popular press attention, especially in recent years. Much of this attention can be attributed to the increase in IPO activity as a function of the “dot com” phenomenon. Of particular interest to both academics and practitioners is IPO underpricing. Review of existing research suggests little consensus regarding those factors associated with underpricing. We provide a meta-analysis of published studies. Our findings reveal a number of significant relationships, many of which are opposite that predicted by signaling theory. Implications of these findings for practice and future research are discussed.

IPO Underpricing across Different Sectors in India from 2010-2020

2021 ◽  
pp. 337-345
Author(s):  
Lakshay Khandelwal ◽  
Aditi Agarwal
Keyword(s):  
Standard Deviation ◽  
Initial Public Offerings ◽  
Weighted Average ◽  
Weighted Mean ◽  
Ipo Underpricing ◽  
Consumer Durables ◽  
Engineering Construction ◽  
Public Offerings ◽  
Short Period ◽  
Indian Stock Market

In this paper, underpricing of Initial Public Offerings across thirteen different sectors in the Indian stock market have been analyzed, during the period 2010–2020 (Data available till 31st October 2020). A sample of 129 companies, having an issue size greater than INR 100 crores, was examined and analyzed through IPO listing gains, weighted mean, standard deviation and coefficient of variation. The study shows that Retail, FMCG and Consumer Durables industry was underpriced the most while Engineering, Construction and Infrastructure industry issues were underpriced the least or overpriced. It was also found that Initial Public Offerings (IPOs) could be a window to make immediate gains in a very short period of time if thorough analysis of the issues and the market conditions is performed. Furthermore, it was observed that the first day return of the companies varies highly and cannot be fairly predicted by the weighted average first day return of the respective sector.

scholarly journals An empirical study of IPO underpricing: Evidence from Chinese stock market

2014 ◽  
Vol 12 (1) ◽  
pp. 139-152 ◽  
Author(s):  
Tianxiang Xu ◽  
Yujie Zhao
Keyword(s):  
Empirical Study ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Chinese Stock Market ◽  
Short Term ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Public Offering ◽  
Different Characteristics

Initial public offerings, as one of the most important activities for firms, have raising massive amount of researches. Regarding China, the stock markets are experiencing a massive level of IPO underpricing, which leads to trillions of dollars leaved on the table. This study is conducted for the question why Chinese IPO are so heavily underpriced and the determinants of IPO underpricing, also the possibility of IPO be underpriced in China. We confirm again that Chinese IPOs are heavily underpriced and the average underpricing level is about 110%. Further, Chinese IPO will experience a negative short term return starting from 10 days after listing, and there are significantly different characteristics for state owned IPOs and private IPOs. This study finds that information asymmetry, proportion of state owned share and risk are the mainly determinants of IPO underpricing in China. Additionally, one of the biggest reason that Chinese initial public offering is underpriced so much is because of government participation, since we find that firms with larger proportion of government state owned shares will be more underpriced.

scholarly journals Review of short-run performance of initial public offerings in Australia

2021 ◽  
Vol 18 (2) ◽  
pp. 188-200
Author(s):  
Lutfa Tilat Ferdous ◽  
Niroshani Parahara Withanalage ◽  
Abyan Amirah Qamaruz Zaman
Keyword(s):  
Regression Analysis ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Secondary Market ◽  
Publicly Traded ◽  
Ipo Underpricing ◽  
Secondary Markets ◽  
Public Offerings ◽  
Short Run ◽  
Total Market

This study investigates the short-run performance of initial public offerings in Australia. Based on sources from the Morningstar DatAnalysis database, we analyzed 211 Australian publicly traded initial public offerings (IPO) listed on the Australian stock exchange between January 2011 and December 2015 using multiple regression analysis with dummies to represent industry and listing year. According to our analysis, total market return indicates an IPO underpricing phenomenon whereas secondary market shows an overpricing scenario. Moreover, this analysis supports the contention that short-run performance fluctuations were based on the listing year and industry settings. This study contributes to the literature by analysing the short-run performance of both the primary and secondary markets

scholarly journals The two-tier board system and underpricing of initial public offerings: Evidence from Austria

2014 ◽  
Vol 12 (1) ◽  
pp. 352-362
Author(s):  
Lalith P. Samarakoon ◽  
Palani-Rajan Kadapakkam
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Supervisory Board ◽  
Board Structure ◽  
Ipo Underpricing ◽  
Public Offerings ◽  
Management Board ◽  
Board System

We study the relation between initial IPO underpricing and two-tier board structure in the Vienna Stock Exchange of Austria, where a two-tier board is mandatory for listed companies. The board ratio, defined as the size of the supervisory board to the management board, is used to capture the effect of two-tiered board on underpricing. The results show that the board ratio is negatively related with underpricing, consistent with the agency theory which predicts that more effective monitoring implied in a relatively larger supervisory board will lead to lower agency costs, and thus lower underpricing. The results are robust to the inclusion of control variables and suggest that firms seeking to raise external capital will be helped by adopting strong corporate governance standards.

Stage financing and syndication in the IPO underpricing of venture-backed firms: Venture capital and IPO underpricing

2019 ◽  
Vol 20 (4) ◽  
pp. 289-300 ◽  
Author(s):  
Awounou-N’dri Honorine ◽  
Dubocage Emmanuelle
Keyword(s):  
Venture Capital ◽  
Information Asymmetry ◽  
Initial Public Offerings ◽  
Capital Investment ◽  
Ipo Underpricing ◽  
Data Set ◽  
Public Offerings ◽  
Venture Capital Investment ◽  
Ipo Performance ◽  
The Impact

The article investigates the impact of stage financing and syndication practices on the underpricing level of venture-backed firms (VBFs) undertaking their initial public offerings (IPOs). This empirical study uses a unique hand-collected data set concerning more than 260 VBFs that went public on Euronext Paris and Alternext between 1997 and 2013. Our findings suggest a lower level of underpricing for firms backed by syndicated venture capital investment. Additionally, we find that the syndicate size is negatively associated with the level of underpricing. However, there is no evidence that stage financing has a significant impact. Syndication thus appears to be the only relevant mechanism to improve IPO performance (measured by the underpricing level), as it reduces agency costs and information asymmetry between the different stakeholders in an IPO process.

scholarly journals A Comparative Study of Initial Public Offerings in Hong Kong, Singapore and Malaysia

2016 ◽  
Vol 4 (1) ◽  
pp. 1-12
Author(s):  
Horace Ho
Keyword(s):  
Hong Kong ◽  
Comparative Study ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Agency Cost ◽  
Managerial Ownership ◽  
Public Offerings ◽  
Subscription Rate ◽  
Highly Correlated ◽  
The Relationship

Abstract This paper presents the findings of a comparative study on the performance of the initial public offerings (IPOs) of shares listed on the Hong Kong Stock Exchange (HKX), Singapore Exchange (SGX) and Bursa Malaysia (MYX). One indicator of the success of an IPO is its subscription rate, which can be used as a proxy for the level of investor confidence in the stock being offered. This paper examines the relationship between the performance of an IPO and its subscription rate, and the corporate factors that may affect an investor’s decision to subscribe to an IPO. A previous study conducted in Hong Kong (Ho, 2013) did not find support for the effect of the four corporate factors, namely size, managerial ownership prior to the IPO, industry differences and company age, on the subscription decision. However, managerial ownership prior to the IPO was found to be highly correlated with good performance, which could be attributed to a low agency cost in situations where managerial ownership is substantial. Further evidence from Singapore and Malaysia can help to shed light on the importance of agency cost in the pricing of IPOs.

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