The Impacts of Registration Regime Implementation on IPO Pricing Efficiency
We study the impacts of regime changes and related rule implementations on IPOs initial return for China entrepreneurial boards (ChiNext and STAR). We propose that an initial return contains the issuer fair value and an investors overreaction and examine their magnitudes and determinants. Our findin...
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Main Authors | , , , , , , , |
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Format | Journal Article |
Language | English |
Published |
18.07.2023
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Subjects | |
Online Access | Get full text |
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Summary: | We study the impacts of regime changes and related rule implementations on
IPOs initial return for China entrepreneurial boards (ChiNext and STAR). We
propose that an initial return contains the issuer fair value and an investors
overreaction and examine their magnitudes and determinants. Our findings reveal
an evolution of IPO pricing in response to the progression of regulation
changes along four dimensions: 1) governing regulation regime, 2) listing day
trading restrictions, 3) listing rules for issuers, and 4) participation
requirements for investors. We find that the most efficient regulation regime
in Chinese IPO pricing has four characteristics: 1) registration system, 2) no
hard return caps nor trading curbs that restrict the initial return; 3) more
specific listing rules for issuers, and 4) more stringent participation
requirements for investors. In all contexts, we show that the registration
regime governing the STAR IPOs offers the most efficient pricing. |
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DOI: | 10.48550/arxiv.2307.09669 |