Experimental Analysis Of IPO's Under Pricing In A Shares Stock Market Of China

The issue of the IPO's underpricing has been studied by oversea financial circles in theory and practice, and abundant researches based on information economics principle are put forward and tested empirically by IPO samples from different countries' stock markets. Overseas exports fond that the list price process of an IPO is a result that publishes business enterprise, consignee and many negotiations of the investors .A valid market of IPO shouldn't exist super often rate of return. Though the underwriters and the investors make their best to balance the issue the stock supply and need to get the best IPO price. But the rate of the return of a day still is postive. To compare the international IPO market and the IPO market of China , China IPO underpring is more positive . And this directed leading to the gamble investment between the press market and exchange market .In the first market of IPO, Too much investment was put in, Meanwhile, on the second market the investment is scarcity. This paper gives a review of foreign explanation theories and empirical results of the reasons why IPOs are underpriced, with the data of 1999-2002 years of Chinese IPO samples. And built up a massfactors _regressing model. Based on the theories of overseas and of our country's , finding the main factors the influence the IPO's underpricing .The Chinese empirical evidence shows that Rock's adverse selection mode are supported. The writer finds the essential factors that influence the degree of Chinese IPOs underpricing include new issue size, issue rate, issue price, etc. but there is a distinct positive between the last one and the degree of IPOs underpricing. Because the issue price reveals more public financial information provided by the issuer than the first-day trading prices do, the effect of the information on the underpricing is not obvious. Furthermore points out that the decreasing of the degree of Chinese IPOs underpricing has no choice but to reform the existing stock structure, which can make China stock market more efficient.