The Empirical Research On The Reform Of IPO Inquiry System

IPO under-pricing has been a puzzle widely spreading in capital markets all around the world. Many scholars research on it and set up kinds of theories to express it, one of the most popular one is Information Asymmetry Theory. Inquiry system is recommended to efficiently solve information asymmetry problem and introduced by our country. But in fact, IPO under-pricing in our country is still much higher than other developed markets. China Securities Regulation Commission (CSAR) published a document called GUIDANCE ON FURTHER REFORM AND IMPROVEMENT OF ISSUING SYSTEM on June 11th,2009. This paper is mean to research on whether this guidance worked, how it improves the issue system and the change of investors'behavior.Our empirical study found that (1) this reform does work and improves the IPO under-pricing; (2) It is a right direction to regularize the institutional investors' behavior to make pricing system more efficient because other investors can indeed leaded by institutions; (3) The factors influencing IPO initial return (AR) is changed after the reform, fundamental information attributes more to AR while market factor's affects decline; institutional investors'behavior always play an important role to AR; (4) After all, Investors are getting mature and can partly make rational decision, but the whole market emotion remains speculative, both institutional and other investors just invest for short-term return.Then we made some suggestions to improve IPO under-pricing and pricing efficiency, hoping that CSAR and industry association can put forward institutional investors as a good medium to transmit more information to the whole market, to balance information asymmetry between underwriters and investors as well as investors.