Research On The Performance Of IPO In Shenzhen SME Stock Market

Initial Public Offerings (IPOs) has always been the focus of academy. The long-term performance of IPOs is one of the three hot issues in the IPO fields. A large number of overseas researches find IPO long-term underperformance, especially in mature market. But in china there are a lot of disagreements.This thesis based on a sample of 183 IPOs which were publiced in Shenzhen Small and medium-size Enterprise (SME) stock market since 2004 to 2007, empirically examines their market performance in three years.First, this paper use Cumulative Abnormal Returns (CAR) to analyze the market performance of the entire and group sample. Through this research, we find that in China's SME market the performance of IPOs can be divided into two different stages. At first, especially in the first 9 mouths, there exist an underperformance, but in the long-term, the SME IPOs outperform the Shenzhen composite index by 10.11%.Second, we study the reasons for IPOs market performance, from five different points of view. They are characters of corporations and issues, corporate governance, financial performance before and after initial public, investor behavior. We find that the investor behavior and the initial public characters are the main reasons for the early underperformance. If the corporations have a good governance and financial performance, in the long-term, their IPOs market performance will be better than others.