The Study Of Underpricing Of Initial Public Offerings

According to effective market hypothesis, there is not excess income in new listed stocks, which is the same as other financial varieties on the capital market. But the research achievements of all countries indicate that first-day earning ratio of new stocks exceeds the basic earning ratio of the market greatly. The underpricing of new stocks is a piece of phenomenon that exists generally and the degree of underpricing in the primary market of our country is much higher than that in stock markets of other countries. Too high underpricing has caused mismatch of risk and earnings between primary and secondary market in our country, concentration of a large amount of fund in primary market, and has influenced the optimum collocation of capital and the sound development of the capital market. Therefore, it is necessary for us to research new stock underpricing, hold the influence factor of underpricing in our country and observe the implementation impact of the authorizing system on underpricing so that the degree of underpricing can be reduced and suggestions be offered for the issue pricing market-oriented reform of new stocks.The principal parts of this text consist of five parts: chapter two summarizes the research achievements of underpricing, including the overseas research about general existence of underpricing and seven theories of its influence factors, and domestic achievements of underpricing. Chapter three analyzes the high underpricing rate by statistical method and the connection between issuing method and underpricing, chooses ten explanation variables to investigate the influence factor of underpricing by demonstration research using stepwise. This research is based on the theory of underpricing and combines the reality of the securities market. Chapter four analyzes the reason of high underpricing in our country by means of stochastic frontier models. Positive research shows that it is not the low pricing of issuing price, but the unreasonable pricing of new stock in secondary market leads to the high underpricing. So it is invalid to loosen the issuing price to decrease underpricing. In chapter five, we use statistic method to analyze the issuing price of new stocks, the connection between issuing P/E ratio and P/E ratio on the secondary market, the markup on the first day of coming into the market and the amount of fund raised etc before and after the authorizing system. The result indicates that the implementation of the authorizing system elevated issuing price of new stocks, but at the same time, the price on thesecondary market rose also. Implementations of the authorizing system didn't reduce the degree of underpricing on our primary market. The reason is that this issuing price denominated in market-oriented price is not the real market-oriented price. Chapter six is the conclusion of this paper and the policies suggested. These policies are based on the positive analysis in the third, fourth, fifth chapter and can be divided into three points: the first one is that the administration of stock issuing and the competition of stock market should be loosened, the second one mentioned is the accurate localization of participants in the primary market, the last one is the introduction of "green shoe" option.Zhao Lulu (finance) Directed by-professor Wu Haihua...