Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
963319 | Journal of International Financial Markets, Institutions and Money | 2008 | 15 Pages |
Abstract
In this study, we examine the relation between pre-offering demand and aftermarket performance of IPO firms in the Hong Kong stock market. We find that IPOs with high investor demand realize large positive initial returns but negative long-run excess returns, while IPOs with low investor demand realize negative initial returns but positive long-run excess returns. This result suggests that (1) pre-offering demand for IPOs is at least partly driven by investors' over- or underreactions to information about firms' post-issuance prospects, and (2) while high- and low-demand IPOs are not priced at their intrinsic values in early aftermarket trading, eventually their true values are reflected in their pricing.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Sumit Agarwal, Chunlin Liu, S. Ghon Rhee,