Recent posts have commented upon rising investor concerns about transparency and accuracy in the financial reporting and corporate governance activities of Chinese companies, even those whose stock trades on public U.S. stock exchanges. An item in today’s Wall Street Journal (wsj.com) relates how this concern, among other considerations, is affecting share prices of recent China – related IPOs.

A combination of hype and hyped-up investors has caused a lot of misery for Chinese companies debuting in the U.S. this month. Five China-based stocks have launched initial public offerings on the Nasdaq Stock Market or New York Stock Exchange so far in May, and all but one have lost ground since their first day of trading. Only one of the six non-China deals that debuted during that time is trading down.

Analysts and bankers say a rush of so-called momentum investors seeking the next hot deal have been piling into Chinese stocks that are listing in the U.S., driving demand for shares higher ahead of their debuts. The offerings then are priced within or above expectations. Whether the stocks start off with gains or a decline, these eager buyers become quick sellers. The resulting downturns have released a cascade of investors seeking the exits. An additional damper has been increased volatility in the broader market in recent weeks.

“More investors are looking at these IPOs with expectations of participating in a hot deal. If the stocks turn down early on with those kinds of buyers, it gets exacerbated and becomes a significant selloff,” says Nick Einhorn, an analyst at Greenwich, Conn.-based research firm Renaissance Capital.

“There’s certainly a lot of game theory and psychology around any transaction, and the lines of market momentum will intersect with those of the company’s fundamentals,” says Dan Cummings, global head of equity capital markets at Bank of America-Merrill Lynch. “To the extent that people like something solely because it’s oversubscribed doesn’t portend well for understanding the company’s intrinsic value. They may know the price but will not have conviction in the aftermarket if there’s a sign of weakness in price.”

Mr. Cummings places some of the blame for IPO froth on the media, saying journalists fuel the hype surrounding some deals. “The media focus on IPOs has been binary,” he said. “There is a media obsession now with brand names, but there are plenty of great companies, game changers with disruptive technologies, coming to market that get far less attention.”

Over the past eight months, 36 Chinese companies have tapped the U.S. capital markets for the first time, with an average first-day pop of 21%, according to data tracker Ipreo. Thirty days after their debuts, these stocks traded at an average of only 4% above their offer prices. The disparity between the 30 day performance of China – related IPOs and the performance of U.S. – based IPOPs is striking, with U.S. – based IPOs showing an average 30 day return of 22%.