Remuneration analysis in Hong Kong IPO of Chinese enterprise

• Main Authors: Shing-Yi Lin, 林幸宜
• Other Authors: 董澍琦
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/77883180158494858850

碩士 === 中興大學 === 高階經理人碩士在職專班 === 95 === An initial public offering (IPO) is the first sale of a corporation''s common shares to investors on a public stock exchange. Many empirical findings are consistent with explosive short-term soars on stock prices during IPOs’ periods, called “the IPO honeymoon period”. In this paper, we focus on Chinese companies listed in Hong Kong, and find out performances of those companies in one-month, three-months, six-months, one-year and three-years after the IPOs’ period. Further, we discuss notable impacts on the short-run, medium-run and long-run returns of those companies’ stock prices. Before Hong Kong returning to China, most Chinese companies listed in Hong Kong experienced negative immediate daily returns after IPOs’ periods, resulting from uncertain political developments and lacking of means to introduce China enterprises on the exchange. Only after Hong Kong 1997 sovereignty transfer, grey markets propped up. Investors could cross deals to lock up the profits during IPOs. They could choose to sell off the companies stocks once the prices hit the “lock-up prices”, triggering dramatic trading volumes on those stocks during the first day of IPOs. The Asian financial crisis delivered negative impacts on returns of companies listed before or in the year of 1997 and 1998. Performances over this period were negative. After that, Hong Kong’s political environment improved sharply and China opened capital markets gradually, returns on listed Chinese companies in Hong Kong were on upward trends, especially notably after 2002. The Hong Kong market now becomes a gateway between China and Overseas. Becoming more confident with Chinese enterprises’ exponential future growth, being no restrictions over capital controls as well as investment amount limits (unlike some obstacles in Taiwan), foreign investment in the domestic market is strong and affluent. This would support long-term capital gains on the related stocks to reflect their fair prices. The paper concluded the following two notable findings for affecting those listing stocks performance: 1. Short-run returns (e.g. daily, weekly, and monthly) are determined by over-subscription rate, demonstrating the investors’ confidence with positive correlation. The higher the over-subscription rate is, the higher the short-run return delivers. 2. Long-run returns (e.g. quarterly) are mainly determined by macro-economic conditions favored or not on the financial markets. For example, the stock reforms on China stock markets in 2002 affected dominantly on the long-run returns over the Chinese enterprises listed in Hong Kong.