Short sales constraints, divergence of opinion and IPO overvaluation

Author

Wang Yi-xia ; Zhang Hui

Author_Institution

Sch. of Manage., Huazhong Univ. of Sci. & Technol., Wuhan

fYear

2008

fDate

10-12 Sept. 2008

Firstpage

1163

Lastpage

1168

Abstract

In a stock market with strict short sales constraints, the divergence of opinion will affect the asset price significantly. Optimistic investors determine the asset price in the short run, which causes the overvaluation of assets. Using the dispersion of analyst forecast of first-day trading price and the turnover rate on the first trading day of IPOs in Chinese stock market from 2001 to 2007, this paper examines the relationship between the divergence of opinion and the IPO overvaluation. The results show that the higher the dispersion of analystspsila forecast, the higher the level of IPO overvaluation.

Keywords

pricing; stock markets; Chinese stock market; IPO overvaluation; asset price; first-day trading price; optimistic investors; strict short sales constraints; Asset management; Conference management; Cost accounting; Dispersion; Economic forecasting; Engineering management; Marketing and sales; Stock markets; Technology management; Volume measurement; IPO overvaluation; analyst’s forecast; divergence of opinion; short sales constraints;

fLanguage

English

Publisher

ieee

Conference_Titel

Management Science and Engineering, 2008. ICMSE 2008. 15th Annual Conference Proceedings., International Conference on

Conference_Location

Long Beach, CA

Print_ISBN

978-1-4244-2387-3

Electronic_ISBN

978-1-4244-2388-0

Type

conf

DOI

10.1109/ICMSE.2008.4669057

Filename

4669057