Comparative Study On The Efficiency Of IPO In Different Stock Offering Systems In China

The efficiency of initial public offerings (IPO) refers to the performance measurement of IPO. It includes pricing efficiency of IPO, corporate performance after IPO and long-run performance of IPO. In the foreign papers, the researchers only focused on the behavior analysis for market participants while the impact of offering system is often neglected. It is significative to research the efficiency of IPO in two different offering systems in China, because it benefits how to improve the efficiency of IPO market in China and provides insight to merging securities market. On the basis of the domestic and overseas study results in this field, the empirical studies on the efficiency of IPO in China A-shares Market are given.Study on pricing efficiency of IPO going public in different offering system. In this chapter, with 1278 stocks listed in Shanghai Stock Exchange and Shenzhen Stock Exchange, the pricing efficiency of IPO under different offering systems is investigated by using T-test on initial returns (IR) of stocks classed by different verifying systems and Variance Analysis on IR of stocks classed by different offering methods. The conclusions are given: IPO pricing in approving period is more efficient than that in authorizing period, and IPO inquiry mechanism, as well as the method of allocation to second market investors, is more efficient than the other methods. What' more, other factors are also analyzed.Study on the corporate performance after IPO going public in different offering system. ROA and ROE which reflect the profit ability, CR and DAR which reflect the Solvency, and TAT which reflects the operation capability are taken as measures of IPOs performance. With 661 companies going public from April 1999 to June 2001 in authorizing period and 280 companies from April 2001 to May 2005 in approving period chosen as sample data, by taking paired T-test on the corporate performance (in the first year, the second year and the third year) with the performance in the year of IPOs in each different offering system independently, the results show that the corporate performance after IPOs in approving period is more efficient than that in authorizing period.Study on the long-run performance of IPOs going public in different offering system. With a sample of IPOs going public form April 1993 to June 1999 and another sample from April 2001 to December 2006, a empirical study on the long-run (one year, two years and three years) performance of IPOs in different offering systems is put forward by using Fama-French's three-factor model, and the differences and the reasons are given. Results show that the long-run performance in one year, two years and three years of IPOs in authorizing period is more efficient than that in approving period, but it is contrary in four years and five years.