The Research On The IPO Underpricing Of China

IPO underpricing has been a mystery, which attracted lots of scholars to study. Our country's scholars studied this phenomenon after 1997.But there were no systematic studies about the underpricing because our stock market was of the new and transient characteristics. Most of the researches analyzed the underpricing over a short period and lacked the systematic studies from the institution perspective. This paper lists the documents about underpricing firstly. Then this paper points out that our country's underpricing rate is more serious than others' by the comparison. The issue market constitutes our stock market and is very important. The IPO underpricing will lead the two parts of the stock market to develop unbalanced. Of course that will enhance the risk of the market. So the paper analyzes ten kinds of factors for the underpricing on the basis of the other documents. Meanwhile, the third chapter analyzes how the enterprises and investors as well as government and underwriters impact the underpricing through the game theory. In the fourth chapter the paper builds an empirical model to analyze the underpricing with the regressive method and data from 1996 to 2004.From the conclusion we can see that IPO underpricing was caused by the defect of the stock market systems. The investors pay more attention to the expansion of the issue and money collected by the enterprises. The investors expect the IPO underpricing to compensate the speculative risk loss, especially when they have no other income. But the underpricing rate and the reward are affected by the market trend. Price-earnings ratio restriction is the only choice for the government to reduce the degree of IPO underpricing. At last, this paper gives some practical suggestions according to the above.