ABSTRACT
Based on the event-study methodology, this study investigates the effect of China’s milestone registration-based initial public offering (IPO) system reform on stock price efficiency and price discovery. Our findings indicate that the reform improves price efficiency in the short and long term. Price discovery under the registration-based IPO system is stronger than under the approval system. Additionally, the reform’s effect on investor sentiment and institutional transaction costs can affect price efficiency and price discovery.
Acknowledgement
We would like to thank David Peel and the anonymous referees for their valuable comments and suggestions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Declarations
This manuscript entitled ‘The effect of the registration-based IPO reform on price efficiency: Evidence from China’ has not been published and is not under consideration for publication elsewhere. We have no conflicts of interest to disclose. All authors have seen the study and approved to submit to your journal.
Data Availability
All the data-sets used in this study are available on CSMAR Databases. Restrictions apply to the availability of these data, which were used under license for this study.
Notes
1 ChiNext Market is China’s second-board market, aiming to improve market allocation and support start-ups’ growth.
2 A stock facing the risk of abnormal financial or other abnormal conditions is prefixed with “ST”, “*ST”, or “PT”, which indicates special treatment or delisting risk warning.