Initial Public Offerings (IPOs) on ChiNext: Good Investment or Not?

45 Pages Posted: 14 Mar 2013

See all articles by Hamish D. Anderson

Hamish D. Anderson

Massey University - School of Economics and Finance

Jing Chi

Massey University - School of Economics and Finance

Qing (Sophie) Wang

Jiangxi University of Finance and Economics- School of Finance

Date Written: February 14, 2013

Abstract

We study the IPO underpricing and long-run performance of ChiNext, a newly-established growth enterprise board in China. Using a sample of 281 ChiNext IPOs between October 2009 and December 2011, the initial average market adjusted abnormal return (MAAR) is 33.5% and the average 12-month buy-and-hold abnormal return (BHAR) is -45.7%. Although the average MAARs of ChiNext is significantly higher than that of Main Board IPOs, it is not significantly different from SME Board IPOs during the sample period. However, the ChiNext average BHARs is significantly lower than those on both the SME and Main Boards. Regression findings support the information asymmetry hypothesis and the behavioural theory on underpricing for ChiNext IPOs, and we find that underperformance of ChiNext IPOs is consistent with the significant decrease of their operating performance after listing.

Keywords: ChiNext, initial public offerings, underpricing, underperformance

JEL Classification: G32

Suggested Citation

Anderson, Hamish D. and Chi, Jing and Wang, Qing (Sophie), Initial Public Offerings (IPOs) on ChiNext: Good Investment or Not? (February 14, 2013). Available at SSRN: https://ssrn.com/abstract=2233061 or http://dx.doi.org/10.2139/ssrn.2233061

Hamish D. Anderson

Massey University - School of Economics and Finance ( email )

New Zealand

Jing Chi (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North,, 4442
New Zealand
+64 6 3569099 Ext. 84048 (Phone)
+64 6 350 5651 (Fax)

Qing (Sophie) Wang

Jiangxi University of Finance and Economics- School of Finance ( email )

Shuanggangdong Street
Nanchang, Jiangxi 330013
China

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