Numerical Superstition and the Return of Initial Public Offerings: Evidence from Hong Kong IPOs

Abstract This study examines the association between the superstitious belief of ‘Lucky Number 8’ and the initial returns of Initial Public Offerings (IPOs). A sample of 136 Hong Kong IPOs during the period of 2004-2006 indicates that the IPOs with multi 8s in their trading codes had statistically higher returns compared with their peers. The numerical superstition has a significant impact on the performance of IPOs. This study also has new findings in relation to conventional IPOs’ underpricing theories. The measurement of excess demand in retail tranche after ‘claw- back’ is proved to be a better explanatory variable to the IPOs’ underpricing level in the dual-tranche offering mechanism. And the classical signalling effect from secondary offerings is questionable in this study. The findings from this study would be meaningful to the investors and listing firms. Furthermore, the significant effect of superstitious 8 belief also has implications in the behaviour finance theory and Efficient Market Hypothesi