The Aftermarket Performance of Initial Public Offerings:The Hong Kong Experience (2000-2004)
zhang, tang (2008)
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Tiivistelmä
This paper investigated the stock return performance of the initial public offering stocks which are listed on the main board of Hong Kong Stock Exchange during the years 2000 to 2004. The results clearly show that Hong Kong main board IPOs are overpriced on average especially those IPOs in the years 2000 and 2001. This phenomenon may probably be explained by the collapse of the Dot-Com boom. Moreover, in the long term, the IPOs significantly underperformed the market in overall based on the CARs and BHARs methodologies.
By splitting the samples based on the H-share IPOs and non H-share IPOs, the aftermarket performance is comparatively better in the H-share group than in the non H-share group. This result may be derived from the stronger economic growth rate on the mainland China than in Hong Kong from the beginning of last decade of 20th century.
When investigating the aftermarket performance categorized by the year of issuance, we find poorer long term performance associated with the heavy volume of IPO in certain years and this result proves that the issuing firms are taking advantage of “windows of opportunity”.
By splitting the samples based on the H-share IPOs and non H-share IPOs, the aftermarket performance is comparatively better in the H-share group than in the non H-share group. This result may be derived from the stronger economic growth rate on the mainland China than in Hong Kong from the beginning of last decade of 20th century.
When investigating the aftermarket performance categorized by the year of issuance, we find poorer long term performance associated with the heavy volume of IPO in certain years and this result proves that the issuing firms are taking advantage of “windows of opportunity”.