An evaluation of the effect of the IPO regulation reforms in China on IPOs of high-tech firms

Abstract

After more than 20 years in developing, China stock market has become an essential market in the world. However, it is still not a mature market. There are still problems with IPO issues. The China Securities Regulatory Commission recently changed the IPO regulation in order to improve the IPO pricing. This paper examines the IPO underpricing level of Chinese high-tech firms from over the 10 years. Our study reveals that IPO underpricing is related to the lottery rate and initial turnover rate. The study also confirms that the IPO underpricing level decreases significantly after each reform, which means the IPO regulation reform has produced some positive effect on Chinese market. As a result, the degree of uncertainty surrounding IPO issue decreases with each reform.