Abstract
By considering two time windows of crises, first one is the time period of Asian financial crisis (1997-1999) and the other one is prevailing global economic crisis (2007-2009), the pattern of underpricing and aftermarket performance are studied. A sample of 626 companies and Market adjusted return model are used. Result indicates that in the recent global economic crisis IPO activity is on shrinking trend and there is 10% increase in average underpricing as compared to last Asian financial crisis. There is a fluctuating trend in aftermarket performance of IPO returns. A minimum return of 62% in 2009 is observed. This study also endeavors to examine the efficiency of Chinese stock market and how the Asian and global financial crisis influences the efficiency of Chinese stock market. In order to determine the efficiency of Chinese stock market we apply efficient market hypothesis of random walk. Here we apply ADF, DF-GLS, PP and KPSS tests on stock market returns in order to check the unit root in data series for both Shenzhen and Shanghai stock exchanges separately. The results of the study shows that Chinese stock market is weak form efficient and past data of stock market movements may not be very useable in order to make excess returns. In both periods of crises Chinese stock market is observed weak form efficient.
Highlights
The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion
The purpose of this study is to test whether Chinese stock market is weak form efficient or not in normal circumstances and what impact global financial crisis has on the efficiency of Chinese stock market
The purpose of this study is to examine the degree of under pricing and after market performance in new issues of Chinese stock market during last Asian financial crisis and prevailing global financial crisis because in such kind of circumstances the volatility of market is sometimes unpredictable for both emerging firm and its stakeholders
Summary
The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. One the other hand global economic crisis of 2007–2010 has been called by leading economists the worst financial crisis since the Great Depression of the 1930s. Economists have started calling it "The Great Recession." It contributed to the failure of key businesses, decline in consumer wealth estimated in the trillions of U.S dollars, and a significant decline in economic activity. Many causes have been proposed, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010-2011 periods. No debt crisis and stable Yuan are the key features due to which china was among the least effected countries in this crisis
Sign-in/Register to view highlights & summary 
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call