Ipo Long-term Performance Empirical Research

This thesis studies the long-term performance of A-share initial public offerings (IPOs)issued in China during 1997-1999 period. The first part is on the current situation ofChina'IPO market and offer mechanism reform .The second part is on mainly on empiricalanalysis of IPOs in China .The empirical analysis is focusing on two aspects .One istime-series analysis with CAR method , the other one is cross-sectional analysis with BHARmethod. Shanghai and Shenzhen Stock Exchange are used as benchmark to compare withthe long-run BHAR of IPO stocks . This conclusion of this thesis is as follows: In the long-run, A-share IPOs outperformthe stock index in Shanghai and Shenzhen Stock Exchange by 8.21% and 31.17%respectively.The long-term buy-and-hold return and gross proceeds are negatively related.The long-run positive performance of IPOs exist in different industries, and not correlatedwith the abnormal return on the first day of listing; Different offering mechanism adoptedfor the new share issue affects the degree of long-run performance. IPO overpricing is thelargest under pro-rata allocation on oversubscribed shares, is the second largest under thefixed price offer mechanism. Hence, factors like the extent of market extension and offeringmechanism have significant impact on IPO long-run performance.