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Long-Run Performance of Chinese Initial Public Offerings: Further Evidence

Lookup NU author(s): Dr Chen Su

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Abstract

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.


Publication metadata

Author(s): Su C, Bangassa K, Brookfield D

Publication type: Article

Publication status: Published

Journal: Asia-Pacific Journal of Financial Studies

Year: 2011

Volume: 40

Issue: 2

Pages: 285-316

Print publication date: 17/04/2011

ISSN (print): 2041-9945

ISSN (electronic): 2041-6156

Publisher: Wiley-Blackwell

URL: http://dx.doi.org/10.1111/j.2041-6156.2011.01039.x

DOI: 10.1111/j.2041-6156.2011.01039.x


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