Initial Public Offerings In China Long-term Weak Empirical Research

The initial public offering of stock was first seen 60 years of the 20th century. Scholars began to concern the issue of IPO since the beginning of 1980's, even in those countries where banks is the major financing channels. By now, research in every country is organized around three anomalies of new stock marketplace:High Initial Returns of IPO, Hot Issue Markets of IPO, Long-run Underperformance of IPO. The performance of the IPO issue of long-term weakness is a very important issue, but our study of this issue have not yet started begin until 2000. There are many theories need to improve and a lot of gaps to be filled. Therefore, from the theory point of view, on the long-term weakness of China's IPO can be said that it is necessary.On the other hand, IPO long run underperformance means the proceeds to invest in IPO to be lower than the market average return or invest in other types of non-IPO with the proceeds a longer period of time after the IPO shares 1 to 3 years, the overall performance of the long-term weakness. Measuring long-term weak issue of new shares, mainly to examine whether there are cumulative abnormal returns of new shares This is, the new shares is higher than the average market yield rates of return that part of the proceeds. This phenomenon of widespread and persistent is clearly contrary to the traditional efficient market hypothesis. From the perspective in order to improve the stock market, research of IPO long run underperformance help guide investors to make more effective investment strategy, market structure and system to promote development and improve, improve market efficiency and improve our IPO emerging securities market theory.Object of this paper is IPO price change process listed on the first day to three-year period after the listing. In order to investigate the performance of IPO's market outlook, we use the Chinese A-share market in the January 1,2000-Dec.31, 2009 all shares listed on the data between as samples. After the IPO, respectively one, two, three years time node, analysis of their market performance.. Method CAR used to measure IPO long-term underperformance. The results showed that:in the sample study, Chinese A share IPO's long-term earnings performance was weaker than the market index's performance. There is a significant long-term characteristics of the vulnerable and showing a reversal on the first day of the premium trend. Through further analysis of the causes of long-term weakness, found to be determined by multiple factors, of which the greatest impact on long-term weakness is a listed high initial excess returns.The last part of this paper, the excess returns for the market too early From listed companies, intermediaries, investors and the various systems associated with the four point made some exploratory suggestions. After summing up the main point in the text, points out the direction for further research.