Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/28520
Title: Strategic share allocation and underpricings of IPOs in Hong Kong
Authors: Cheng, LTW 
Chan, KC
Mak, BSC
Keywords: IPO
Strategic allocation
Underpricings
Issue Date: 2005
Publisher: Pergamon Press
Source: International business review, 2005, v. 14, no. 1, p. 41-59 How to cite?
Journal: International business review 
Abstract: In this paper, we introduce two measures of allotment ratios for small investors to examine the strategic share allocation strategy of IPO underwriters in Hong Kong. Employing a sample of 267 IPOs from 1993 to 1997 and statistical analyses including two-sample comparisons and regression models, we find evidence that underwriters use non-discretionary allocation of IPOs to favor small investors in Hong Kong. The results support our argument that in an IPO market where investment bankers do not have a trusting relationship with large investors and an effective mechanism to monitor block traders' selling, IPO underwriters explicitly allocate relatively more shares of better (more-underpriced) IPOs to a larger number of small (loyal) investors. The result may be driven by the regulatory concern on protecting the interest of small investors in Hong Kong. Hence, our evidence suggests that the IPO share allocation strategy is very different between Hong Kong and US.
URI: http://hdl.handle.net/10397/28520
ISSN: 0969-5931
DOI: 10.1016/j.ibusrev.2004.12.002
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