The Empirical Study On Long-term Run Performance Of IPOs And Its Influence Factors

The long-run underperformance of the initial public offerings is one of the three hot issue in IPO research area, until 2000,the scholar in China began to research it,hence,the related theory is far from absent,therefore,many theories need to be completed.Along with the complettion of reform of non-tradable shares and the establishment of the Growth Enterprise Market and Small and Medium-sized Board,the stock market has achieved very big development.Under the circumstance,it is very important to study the long-run performance and factors attribute to it,which can help the investors formulate effective investment strategy,promote the development and perfection of the market structure and improve the market efficiency of IPO market in China.The article studied the long-run performance of 174 shares issued in Small and Medium-sized Board from the day after the first trading day to three years.At first,it calculates the long-run excess returns of the shares using two different methods and exams of whether the underperformance has statistical significance or not.Then it analyzes the factors that affect the long-run performance of initial public offerings in order to find out the main factor that attibutes to the long-run underperformance of IPOs.This study has found that the shares has long-run underperformance in two years after its going to public,until the third year,the shares has showed strong performance compared with the Shenzhen A-share Composite Index.According to the calculation and analysis of regression,the research results indicate that the first day return after its offering has prominent influence on the long-run performance of the new shares issued in Small and Medium-sized Board.The higher the first day return,the higher long-run underperformance in 18 months after its offerings;The first day return was negatively related to the long-run performance in 24 months after its offerings;The amplitude and turnover rate was positively realted to the long-run underperformance.In addition,the company age,the offerings size,the industry belonged and lot winning rate also has impact on the long-run performance of new shares.Finally,the article summed up the research result and proposed policy suggestion to improve the IPO market efficieny:First,it should perfect the IPO pricing mechanism;Second,it should enhance the education of the investors and improve the proportion of institutional invstors;Third,it should perfect the IPO information disclosure system.