Taming the Dragon: The Modernization of the Chinese Equity Markets and its Effects on IPO Underpricing
Abstract
The extreme underpricing of Chinese Initial Public Offerings in the early days of
the Chinese equity markets was reduced by several reforms instituted by the Chinese
government from around 2000 to 2002. These reforms reduced 1-day returns on IPOs from
295% to 72%. The reforms reduced IPO underpricing by decreasing the inequality between
IPO supply and demand. These reforms, while announced between 2000 and 2002, likely
took until around 2004 to take full effect. In addition to inequality between supply
and demand, other factors such as information asymmetry and government/quality signaling
contributed to underpricing both before and after the reforms.
Type
Honors thesisDepartment
EconomicsPermalink
https://hdl.handle.net/10161/3550Citation
Benesh, William Jr (2011). Taming the Dragon: The Modernization of the Chinese Equity Markets and its Effects
on IPO Underpricing. Honors thesis, Duke University. Retrieved from https://hdl.handle.net/10161/3550.Collections
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