IPO Waves in China and Hong Kong

We analyze the anatomy of IPO waves in China and Hong Kong and draw comparisons with the US IPO cycles. The lead–lag relationship between IPO initial returns and IPO volume observed in the US is absent in these two Asian markets. Similar to the US, IPO volume in Hong Kong is sensitive to changes in market conditions and exhibits seasonal variations. In sharp contrast, however, Chinese IPO activity is much less responsive to past market returns and volatility. Surprisingly, hot markets still emerge in China, not because of market forces as in the US and Hong Kong, but due to regulatory choices

Leaders and followers in hot IPO markets

We model the dynamics of going public within an IPO wave. The model predicts that firms with better growth opportunities can find it optimal to go public early and accept underpricing of their issues to signal quality. Data supports this prediction as, on average, early movers underprice their issues significantly more and we show that leaders (early movers with high underpricing) obtain much higher valuations when going public than other IPO firms. Furthermore, after going public, leaders invest significantly more, their sales grow faster, and their profitability remains higher compared to other IPO firms

IPO waves and hot markets in the UK

No abstract available