Research On The IPO System Reform With The Support Of Fiscal Policy

Founded more than 20 years, China’s capital market has developed rapidly and in many aspects reached a level of development that took many mature markets decades or even a hundred years to achieve. Issuance of new shares in the primary market is core part of the allocation of resources in the capital market. The initial public offering (IPO) system is the basis for the protection of the capital market. It refers to various institutional arrangements which are established by government and non-governmental organizations to constrain IPO behaviors in a formal manner. It includes laws, regulations, policies, contracts and rules formulated by self-regulatory organizations etc., specifically includes approval-based IPO system, IPO methods, IPO information disclosure mechanism and IPO regulatory regime.With the improvement of China’s capital market operation mechanism, the internal market constraint mechanism has been further strengthened; a multi-level market has been gradual established. The IPO system in our country is also gradually transmitted from executive-led to market-oriented, from administrative examination and approval system to the registration system, inquiry system, and information disclosure regulatory system.The Communique of the Third Plenary Session of the 18th Central Committee of the CPC pointed out: improving the multi-level capital market system, promoting registration system reform for IPO market, promoting equity financing through multi-channels, developing and standardizing the bond market, and increasing the proportion of direct financing are our next important tasks. Reform of issuance system should be led by the government and it is an important practice of public policy in the capital market, thus the selection of public policy and IPO system as research topics of this paper has great theoretical and practical significance:firstly, it will further improve government performance, improve the efficiency of total factor productivity in the whole market by applying public economics and finance theories about government behavior and performance evaluation into the research of IPO regulation; secondly, through comparative study and learning on the IPO regulation system, it will comprehensively analyse the possibility of implementing a registration system under the current economic environment, carry out a risk assessment, and point out the accessible path to achieve the goal; thirdly, through the comparison of factors affecting the IPO pricing efficiency in the recent three rounds of IPO reforms, it will analyze and summarize endogenous fiscal, financial, and marketing factors which may have impacts on the IPO pricing efficiency.With the method of combining normative and empirical research, this paper makes comprehensive empirical analysis of the influence of Chinese IPO mechanism on IPO efficiency, and makes some expansion and improvement based on previous research modes. This paper also brings public regulatory policy, tax and other variables into evaluating the influence of government public policy on the efficiency of IPO system when evaluates the explanatory variables on the effects of IPO system, which is beneficial to the evaluation of IPO pricing efficiency, and provides the reference for improving the allocated efficiency of social resources. In the study of the issuance examination and approval mechanism, this paper compares the elements of public economics, i.e. evolution of overseas capital market regulation system, basis of regulatory regime, characteristics of main market, market environmental factors, institutional variation modes and institutional variation efficiency. It studies the influence of various countries’ IPO system variation on the overall market efficiency and the main market by carrying out comparison. At the same time, this paper puts forward the direction of next IPO reform.Through the above research, the main conclusions and suggestions about our country’s IPO system are as follows:firstly, the information disclosure mechanism of our country’s IPO system is not perfect, the incomplete disclosure and false disclosure affected market efficiency to some extent. The core of deepening IPO system reform should focus on the development of sufficient, complete and accurate information disclosure. This paper suggests improving the quality and efficiency of information disclosure with technical means, in order to promote the transparent and standardized issuance system. Secondly, through the empirical research, this paper finds out the tax policy has a significant influence on IPO under-pricing level, so it confirms that the public tax policy has a certain transmission and control impacts on IPO pricing. We should consider strengthening market restraint mechanism. Based on existing inquiry system, we should further increase the pilot projects of implementing diversified issuance modes. Thirdly, the approval-based system under the control of government goes against the market mechanism and improvement of efficiency, we should improve public policy, and switch from the mandatory approval-based system to market oriented system, in other words, the framework of registration system should be implemented. This paper also designs the framework of registration system, and puts forward a two-step strategic approach when changing from the approval-based system to registration system:the first step is to form an approval-based system with higher marketization degree. The second step is to establish an approval mechanism under the registration system, and eventually switch to a complete registration system.Public policy, especially financial policy has strong interactive impacts on the capital market and the IPO system. This paper also puts forward related tax policy to support the reform of IPO system from the perspective of public policy: firstly, increasing the development of bond market and promoting the expansion of multi-tiered IPO market; secondly, increasing fiscal expenditure on the support of institutional investors; thirdly, through the guidance of fiscal expenditure, giving full play of local financial support on the development of capital market; fourthly, changing the market’s income and expenditure structure through the execution of securities transaction tax, stamp duty, income tax, thus adjusting the gains of market interest group and contributing to the development of efficient and equitable capital market; fifthly, strengthening the guiding role of financial resources, promoting market-oriented reform of capital market and the emergence of new modes of innovative enterprises.