Journal of Financial and Quantitative Analysis Vol. 59 No. 1 2024

Initial Public Offerings Chinese Style

Yiming Qian¹; Jay R. Ritter²; Xinjian Shao³

¹ University of Connecticut · ² University of Florida · ³ University of International Business and Economics

Abstract

This article provides a survey of China’s initial public offering (IPO) market, focusing on IPO pricing, bids and allocation, and aftermarket trading. We show that strict regulations result in suppressed IPO offer prices and high initial returns, causing a high cost of going public. Investors treat IPOs as lotteries with extremely high short-term returns, with little attention to the long term. The auction selling method, however, works in the way it is supposed to. Mutual funds bid in a more informative way than other investors, and their advantages are unlikely to be due to underwriters’ preferential treatment. We also discuss the latest registration-system reform.

DOI

10.1017/s002210902200134x

Volume

59

Issue

1

Pages

1-38

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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