The Study Of Initial Public Offerings Underpricing In China's Stock Market

IPO Underpricing is a fact that exists in almost every stock market around the world. Many Hesperian economists made a lot of researches on this phenomenon and gave answers from different angles. Internal and external empirical researches on IPO underpricing of china show that the extent of IPO Underpricing in china stock market is far more serious than that of any other nation, but as the stock market of china is not mature and has definite differences with external stock market, so the western theories can not give satisfactory answer. In order to find the reason that accord with the situation of china. This paper reviewed the researches of the former and investigated on the development of Chinese IPO market, selected 543 A shares issued in Shanghai from January, 1996 to August,2004 as sample, and used the Excel and Eviews software to study Chinese IPO Underpricing. The result indicates that IPO Underpricing of Chinese stock market is undoubted, it also indicates that Chinese IPO Underpricing is obviously and positively associated with the issuing Price-Earning Ratio ,Liquid Ratio and Turnover on the first day and negatively associated with issuing price and issuing scale. The corporation situation before IPOs and the time slot between issuing and coming into the market are two factors that mostly effect the Underpricing in mature capital market of developed country,but they have no obvious effect on the IPO Underpricing of China. The IPO Underpricing in Chinese stock market is essential different with that in external mature capital market, the serious IPO underpricing in china is not undervaluing in corporate valuation which prevalently exists in external market, the roots of IPO Underpricing in china are regulation deficiency of the issuing system and the separated equity system and over-speculation of the exchange market.