The Empirical Study of IPO in Hong Kong China: with the Initial Offer Price to the IPO Reflected its Fundamental Information Significantly
Dr. Ping-fu LAI, Chi-Fung LO

Abstract
Initial Public Offer (IPO) under-pricing is the “traditional world-wide phenomenon” for raising capital in the market. It used to enhance the attractiveness to the investors as well as ensuring the sufficient subscription for listing successively. The issue of IPO pricing is depending on different determinants to decide in under-pricing or over-pricing as offer. In this study, it examines how influences to the offer price of IPO by those factors of determinants. This paper tackles the issue of under-pricing IPO and the relevant mechanism from the perspectives of behavioral biases and agency conflicts. In addition, it evaluates between the under-pricing mechanism and any information asymmetry involvement for generating abnormal return in IPO investment. We examine the IPO listed to help to investigate the influence in the offer price from the various factors of determinants. A methodology of multiple regression technique used to define the null hypothesis as “With the Initial Offer Price to the IPO reflected its fundamental information significantly.” is adapted or not. It showed that initial offer price is influenced in earnings per share, retained ownership, growth prospects, leverage and under-pricing level significantly.

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