The Empirical Study On The Influence Of Ownership Structure On IPOs

Over 60% of all shares in China's Stock market are not in circulation because of the old economic system. This unique ownership structure has become the key factor behind the sharp contrast of the share prices in China's stock market- and those in the western countries. This dissertation aims at studying the relation between the ownership structure and the IPOs'return. The paper includes three major parts:First, I analyzed the characteristics of ownership structure of China's listed companies, The analysis shows that the major defects of the ownership structure of China's ccompanies, includes: the same shares do not enjoy the same right, state-owned shares dominate the ownership structure and shares owned by state-owned entities cannot circulate.Second, I have a brief review on the domestic & foreign studies on IPOs. It includes two parts: the review on the studies of under-pricing issue and its causes , and the review of the significant factors in the determination of IPOs'return.Last comes the main part of the dissertation, that is, the empirical study on the influence of ownership structure on IPOs. A sampleof the 374 stocks traded on Shenzhen Securities Exchange between April 1993and December 2000 were chosen as the sample. I have adopted a market model for the new stocks, adjusted by the market index, to test the short-term & long-term influence of the ownership structures on the market performances after IPO. The study shows that the abnormal returns are higher on the first day of the IPOs. The circulating shares ratio has no significant influence on the abnormal returns. It is the number of the circulating shares that has significant influence. In the longer term, the market performance of IPOs is better than the average. Different circulation shares ratio and different number of shares combined produce significantly different market trends.