International Journal of Business and Economics Volume 9, No. 1 April​, 2010

On IPO Market Anomalies through the Emerging Stock Market in Taiwan

Yi-Shuan Chen

Ph.D. Program in Business, Feng Chia University, Taiwan and Department of Banking and Insurance, National Taichung Institute of Technology, Taiwan

Shin-Herng Michelle Chu

Department of Finance, Feng Chia University, Taiwan

Abstract

This study investigates the long-term performance of initial public offering (IPO) firms in Taiwan since it established a pre-IPO market, the Emerging Stock Market (ESM), starting in 2002. The analytical results indicate that IPO firms in Taiwan suffer long-term post-issue deterioration in operating performance, and the difference in deterioration between ESM and direct listing firms is more significant for the Taiwan Stock Exchange than for the Gre Tai Securities Market. This phenomenon can be explained by the overly-optimistic-market-expectations and the window-of-opportunity hypotheses; however, managerial ownership control variables are not statistically significant.

Keywords：initial public offering, operating performance, emerging stock market.

JEL Classifications：G30, G31.

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