UNDERPRCING OF INITIAL PUBLIC OFFERING IN HONG KONG SHARE OF HONGKONG STOCK EXCHANGE

Abstract

The main purpose of this study was to quantitative analysis the Information Asymmetry Theory and three dimensions influence on the under-pricing initial public offering in Hong Kong stock exchanges (herein after will use HKEx to substitute) in the context of Hong Kong. In this study the under-pricing degree of 34 Hong Kong IPOs in 2016 were measured by Market adjusted initial return. Information asymmetry theory with three dimensions and several other highly related factors were reviewed and employed using an OLS regression to test if these factors had impacted on IPOs under-pricing degree in Hong Kong. The findings showed that both information asymmetry information theory and three dimensions played a significant role in the under-pricing of the Hong Kong Share market in HKEx. In particular, information asymmetry appeared to have majority explainable power since almost all variables that belong to information asymmetry theory were found to be significant. Besides that, the results showed that the information asymmetry theory contributed hugely in the under-pricing of IPOs in Hong Kong. The results could thus contribute to companies’ and investors’ knowledge about the impact of non-financial factors on share pricing during the IPO process for the Hong Kong Shares.