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Estimation of the IPO Efficiency in China

Student: Azeev Aleksandr

Supervisor: Yulia Ovanesova

Faculty: Faculty of Economic Sciences

Educational Programme: Strategic Corporate Finance (Master)

Year of Graduation: 2018

The relevance of this study is defined in the context of high popularity of IPO in China as the source of raising capital or exit strategy for founders and venture capitalists. IPO process is unique in the financial world and has its own characteristics. Underpricing is phenomenon which is inherent to IPO. We studied different factors affecting the degree of underpricing or initial returns which is the measure of underpricing. The research is based on the data on Chinese companies proceeded IPO during the period 2000-2017. We found out, that such factors as the length of lockup period and trading volume affect initial returns positively whereas offering size, market conditions and age of the company have negative effects on IPO initial returns. Besides, we obtained the results that both shares of type A and of type B are underpriced during the IPO and for type A shares IPO initial returns by 6% higher than for type B shares.

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