This article discusses the initial public offerings (IPO) market in China and reviews the literature on IPO underpricing. A variety of reasons for underpricing are examined, including information asymmetry, ex ante uncertainty, signaling hypothesis, ownership dispersion, and market feedback. Other features of the Chinese market, such as inequality of supply and demand, allocation mechanisms, ownership structure, and market sentiment, are also considered in explaining the high level of underpricing in China.
|Pages (from-to)||72 - 85|
|Number of pages||14|
|Journal||The Chinese Economy|
|Publication status||Published - 2011|