Underpricing and Long-Term Performance of Chinese IPOs

This research paper investigates the short-term underpricing and the long-term underperformance for IPOs on the Chinese financial markets during the time-frame between 1992-2004. The results show that the degree of short-term underperformance, when measured with the first day opening prices, are similar to western markets. However, stocks on the Chinese markets do not show long-term underperformance, but an increase in price instead.