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Lookup NU author(s): Dr Chen Su
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This study examines the long-run performance of 936 Chinese initial public offerings (IPOs) over the period 1996 to 2005 (the post-issue return evidence ends in June 2008). Using a number of empirical methods, including event-time and calendar-time approaches based on a size and industry matching firm benchmark, we find a significant long-run overperformance using the equal-weighted buy-and-hold abnormal returns, although not for the value-weighted returns, suggesting that the performance of small-size IPO firms is superior to that of large-size IPO firms. The significant overperformance disappears, however, when using cumulative or calendar-time abnormal returns. The preset study provides out-of-sample evidence in an emerging market context in support of Fama's (1998) argument that reported long-run performance is sensitive to the method of analysis. Finally, based on a rich set of explanatory factors as proxies for both signaling and ex-ante uncertainty characteristics, our results are supportive of the signaling hypothesis, but inconsistent with the divergence of opinion hypothesis.
Author(s): Su C, Bangassa K, Brookfield D
Publication type: Article
Publication status: Published
Journal: Asia-Pacific Journal of Financial Studies
Print publication date: 17/04/2011
ISSN (print): 2041-9945
ISSN (electronic): 2041-6156
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