| IPO underpricing is a world-wide phenomenon in the stock market.In order to explore the causes of IPO Underpricing,Since the 1980s,Western financial scholars carded out a large amount of theoretical research,and formatted three representative schools of theoretical explanations,that is Schools of asymmetric information, institution and irrational behavior.However,these different schools of explanations are difficult to received wide recognition by the theoretical circle.School of asymmetric information treat the IPO underpricing as issuers sell IPO stocks under the true value,but the latest empirical research has found that in fact IPO stocks are issued at a price higher than their true value.Deficiencies in the school of system are that systems used to explain the causes of IPO underpricing are only a unique system of one certain country,not have the world's universal.The lack of School of irrational behavior is that theories have not the core framework,and can not be discussed under unanimously recognized standard.Therefore,IPO underpricing is still the cause of the current financial theorists to be discussed in greater depth.For China,research to IPO underpricing has more important practical significance, because Chinese IPO stocks are not only priced too high,but also the ratio of IPO underpricing is the most high in global range.And the research work of domestic theoretical circles is mostly remaining in the level of using Western theories to explain Chinese IPO underpricing,rarely involved the phenomenon of IPO stocks' high-priced.The purpose of this paper is not only search for the causes of IPO underpricing from the perspective of universal,but also explore the causes of why the ratio of Chinese IPO underpricing is too large,and on the same time why the IPO price is too high from the special circumstances of the Chinese market.In particular,this paper addresses the following three aspects:(1) the reasons for coexistent phenomenon of high IPO price and the IPO underpricing in global stock market;(2) the reasons for coexistent phenomenon of IPO price too high and the IPO underpricing ratio abnormal large in Chinese stock market.(3) Different types of stock market how to choose a suitable mechanism for its own IPO.In this paper,we further explored the IPO pricing under two main IPO mechanisms in global stock markets,that is Fixed-price and Bookbuilding mechanism, by using the "positive-bias" characteristics of information in IPO market as the breakthrough point and based on traditional economics "rational economic man" assumptions.The specific clue is as follows.Firstly,we analyzed the reason of information' "the multi-bias" in IPO market under a specific IPO mechanism,and constructed the basic model of IPO pricing to explain the coexistent phenomenon of high IPO pricing and IPO Underpricing.Then,we derived from the basic model by combining the characteristics of the Chinese market and institutional environment to answers the question why Chinese stock are priced too high and on the same time its IPO underpricing ratio is also too large.Next,we take advantage of China's IPO market data to empirically test he conclusions of theoretical models.Finally,we analyzed the adaptive of two mechanisms in different market environment based on the conclusions of theoretical models,and answered the question of different types of market how to choose their IPO mechanism and propose policy recommendations.The specific structure of this paper is as follows:Chapterâ… is the introduction of this paper.We put forward the main research question of this article,research clues,structural arrangements and possible innovations.Chapterâ…¡is the review of the literature.Through reviewing and grooming the main theories to explain the causes of IPO underpricing of Western financial scholars after the 1980s,we introduce the major theoretical viewpoints of different schools and theoretical differences between different schools.On this basis,we combined the latest empirical research findings and our own research to Comments the existence theory,and proposed the entry point for this study.Chapterâ…¢is the theoretical research of IPO underpricing under fixed-price mechanism.Firstly,we based on the psychological differences of different Subscription acts and interest-driven behavior to reveals the reasons of information' "the multi-bias" in IPO subscription market.Then based on Welch(1992) "information cascade" model and by introduced the "multi-bias" variable of information,we build a basic model about IPO pricing under the double effect of "multi-bias" and "information cascade",and concluded that under the environment of information' "multi-bias",IPO stokes may be present IPO underpring and pricing highly.Finally,we derived from the basic model by combining the characteristics of the Chinese market,to reveals the cause of why the high IPO price and abnormal IPO underpricing are coexistent.Chapterâ…£is the theoretical research of IPO underpricing under Bookbuilding issuing mechanism.Firstly,we revealed the reasons of information' "the multi-bias" in IPO market from the characteristic of phased sales and short selling restrictions to IPO shares.Secondly,we set up an IPO pricing model under American Bookbuilding mechanism by embedded in short-selling restrictions' variables,in the model, institutional investors can subscribe for IPO shares or short sell it in the trading market.We concluded that the difficulty of short selling IPO shares led to the high IPO pricing,and that the IPO underpricing is a natural phenomenon under the phased sale.Finally,we derived from the basic model by combining the characteristics of the Chinese market,and pointed out that the prohibition of short selling led to IPO stock overpriced,on the same time the prohibition of short selling and the lock period of institutional stock by placement is too long led to abnormal large IPO underpricing ratio.Chapterâ…¤is the empirical test to theoretical propositions of chapterâ…¢.Firstly, we tested the information' "multi-bias" in IPO subscription market through the questionnaire.Then we used the IPO data to regress analysis,tested the existence of "information cascade" in China's IPO subscription market and the impact on IPO pricing of information' "multi-bias".Chapterâ…¥is the empirical test to theoretical propositions of chapterâ…£.Firstly, we adopted horizontal comparison method to test the theory conclusion that restrictions on short selling will lead to information' "multi-bias".Then,through the regression analysis of IPO data,we verify relationship between of the short-selling restrictions and the IPO underpricing,institutional placement lock-stock and the IPO pricing and IPO underpricing.Chapterâ…¦is the conclusions and research prospects.Firstly,we analyzed the selection of IPO issuing methods in different types of stock market based on the theoretical conclusions of Chapterâ…¢and Chapterâ… .â…¤,and pointed out that Fixed-price method does not suitable for large stock market and Bookbuilding method also does not suitable for small stock market.Secondly,for widespread IPO underpricing under Bookbuilding issuing method and abnormal high IPO underpricing in Chinese stock market,we propose policy recommendations at two different levels.The policy recommendation for Chinese stock market is to introduce short-selling mechanism,for widespread IPO underpricing under Bookbuilding issuing method is to open when-issued market of IPO shares to improve Bookbuilding issuing method.Finally,we put forward the direction of further research on IPO.In this paper,the innovation embody in three areas:(1) we proposed the view of "multi-bias" firstly about IPO market' information;(2) based on Welch(1992) "information cascade" model and by introduced the "multi-bias" variable of information,we build a basic model about IPO pricing under the double effect of "multi-bias" and "information cascade";(3) under the information structure of "multi-bias" in the IPO market,we firstly set up an IPO pricing model under American Bookbuilding mechanism by embedded in short-selling restrictions' variables.
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