The Long-run Performance Of IPOs In SME Board And The Vital Factors

IPOs(Initial Public Offerings) refers to the first sale of shares by a private limited company to the public. Based on IPOs pricing efficiency, there are several puzzles which attract the scholars’attention. The long-run underperformance of IPOs is one of the three hotspots in the modern financial research. This phenomenon means that the IPOs’long-term return is less than the market index or scale comparable company. It is important to research the long-run performance of IPOs in China’s small and medium enterprises board(SME board).the research of this problem can not only help investor make investment decisions, but also help the authority to reform the old mechanism.This paper selects216IPOs listed on SZSE during2006-2009as the sample, and try to research the long-run performance of SME board from both theoretical and practical perspective. Through event study method, this paper finds that the IPOs of SME board significantly underperformed the market. The extent of3year underperformance is-23.28%calculated by CAR and-44.54%by BHAR, and the3year WR is0.813.This paper finds that listing time, refinancing, initial return and total assets have an influence over IPOs long-term return. Company with-a large scale and high initial return, most probably suffer the lowest long-term return. From this paper, we think that investors are better not hold the IPOs of SME board too long, because it’s not a good investment target.Investors could have better return by hold market index fund. Long-run underperformance indicates that our market is not very efficient, because IPOs’performance seems not relates to the company’s profitability.In the end,this paper summarizes the research,and also gives some advices to help improve the efficiency of IPOs market.