Researches On Underpricing Of Information Industry IPOs

A large number of empirical results have shown that IPO underpricing universally exists in almost every country of the world, not only in the developed countries but the developing ones. Does underpricing of information industry IPOs also exists in our country? What factors cause them if underpricig of information industry IPOs also exists in our country? What are their differences in causing underpricing of the information industry IPOs and the non-information industry ones? How do we improve the financing efficiency of information industry companies? Furthermore, we try our best to give a good answer in this paper.We examine several explanations drawn from prior academic research and current popular press anecdotes for unprecedented level of underpricing information industry firms went public before 2002 in the A-stock market. We provide evidence on the role of previously argued academic theories in explaining the large underpricing of information industry IPOs, and draw some conclusions. The results indicate that offering mode, price-earning ratio, number of floating shares offered, offering price, issuing and listing time interval and underwriters have a significant effect on underpricing of information industry IPOs. Furthermore, there is a positive relation between offering mode, price-earning ratio, the reciprocal of offering price and underwriters and underpricing of information industry IPOs. On the contrary, number of floating shares, issuing and listing time interval have a negative relation with underpricing of information industry IPOs. Based on the above evidence, we also apply game theory and information economics to explaining the underpricing of information industry IPOs. Our analyzing results verify that investors' over-speculation, institution investors' manipulating the stock price, underwriters' adverse selection and moral hazard and auditors' tolerance deeply account for underpricing of information industry IPOs in china stock market.Compared to the other domestic and abroad academic literature, our paper hasseveral advantages as follows. First of all, our samples include the information industry IPOs that are first studied in china. We testify that information industry IPOs have a more severe underpricing than one of the non-information industry IPOs. Second, we take underwriters as a main influencing factor causing underpricing of information industry IPOs. Third, we also provide evidence on the different role of the influencing factors in causing the underpricing of information industry IPOs and the non-information industry ones, such as price-earning, issuing and listing time interval. At last, we apply game theory and information economics deeply to analyzing the underpricing of information industry IPOs, expecting to find the substantial causes inducing the underpricing of information industry IPOs.