This article is an empirical study on the long-run performance of Initial Public Offerings (IPOs) in China, using a sample of 146 A-share firms who made their initial offerings within July 1997 and December 1998. The results show that IPOs in China outperform the market both in the short run and in the long run, with adjusted initial returns of 116.35 per cent and 3-year cumulative adjusted returns of 25.91 per cent. Further investigation shows that the size effect, the investors' long-existing overreaction and the specu lative bubbles in the market can be explanations for the short-run and long- run outperformance of IPOs.
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