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IPO Underpricing After the 2008 Financial Crisis: A Study of the Chinese Stock Markets

by Rui Li 1, Wei Liu 2,3,*, Yong Liu 4 and Sang-Bing Tsai 5,*
School of Economics, Peking University, Beijing 100871, China
Discipline of International Business, The University of Sydney, Sydney 2006, Australia
School of Business, Wuyi University, Nanping 354300, China
Political Economics Institute, Wuhan University of Science and Technology, Wuhan 430065, China
Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528402, China
Authors to whom correspondence should be addressed.
Sustainability 2018, 10(8), 2844;
Received: 16 July 2018 / Revised: 6 August 2018 / Accepted: 9 August 2018 / Published: 10 August 2018
(This article belongs to the Special Issue Risk Measures with Applications in Finance and Economics)
A firm’s capability of raising funding is closely related to its sustainable development. With a more efficient allocation of funding among the whole society, social resources will be better utilized. Initial Public Offering (IPO) can indeed be an effective means of raising capital for corporate ventures. Using 1069 firms which completed IPOs on Chinese stock exchanges between 1st January 2004 and 1st January 2013, we investigate the difference in IPO underpricing before and after the 2008 financial crisis. Based on OLS regression models, we find that the IPOs are less underpriced in the post-crisis period. We examine the moderating effects of firm size on the difference in IPO underpricing between pre- and post-crisis periods, finding that small firms experienced less IPO underpricing than large firms after the financial crisis. After applying different model specifications such as Robust and OProbit regressions, the results remain consistent. Our study contributes to understanding the dynamics and influences of the financial crisis on firms’ IPO cost from the perspective of information asymmetry. View Full-Text
Keywords: IPO underpricing; financial crisis; information asymmetry; financial risks IPO underpricing; financial crisis; information asymmetry; financial risks
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Li, R.; Liu, W.; Liu, Y.; Tsai, S.-B. IPO Underpricing After the 2008 Financial Crisis: A Study of the Chinese Stock Markets. Sustainability 2018, 10, 2844.

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