The Impact of flexible par-value policy on investor demand for IPO shares

On January 1st, 2014 the government announced that the par value of F-shares would no longer be restricted to ten dollars, adopting a Flexible Denomination System instead. This paper examines the impact of the regulatory change on the transaction orientation of IPO investors. Bahadir, et al. (2015) used Cue Utilization Theory to hypothesize contrasting uses of cues by underwriters and institutional investors. An empirical examination of IPOs identifies cues that can reduce problems of IPO underpricing. To examine investor overreactions to subscription results, 232 companies that went IPO in the years from 2012 to 2016 are selected. Logistic Regression Models are used to assess the transaction-oriented framework of IPOs and identify the intervening effects that subscription results have on investment decisions after first-day openings.