The process of common stock (IPO) in China represents privatization, and the IPOs exhibit the highest initial and first-day returnsdocumentedin financial markets. In addition to revealing the short-term excess returns and long-term poor performance of the IPOs, this study focuses on demonstrating how IPO returns are affected by such factors as the proportion of government ownership - the lower the government proportion, the higher the extent of privatization, the firm size, and the lack of alternative investment opportunities to the Chinese investors. The regression analysis reveals that the proportion of state ownership has a significantly negative connection to short-term IPO returns. This shows the market's distrust of government's involvement in business operations and represents confidence in the privatization of state enterprises. The analysis also indicates that firm size, approximated by total sales of the issue year, has a significant positive impact on the returns. The positive relationship between returns and firm size indicates that investors believe that large companies are less risky and, hence, have stronger demand for their stocks.