Research On IPO Underpricing In Chinese Growth Enterprise Market

With the rapid development of China's capital market, GEM market established in 2009, October 30. From now on our country system set up multi-level capital market. Now, the Gem market set up more than one year. Until October 31, 2010, there were 180 stock initial public offerings in the Gem, each enterprise financing 733 million RMB, which get enough long-term capital. In the process of initial public offering of stock, the most important issue is issued pricing. Price is not only issue company, the relationship between the actual benefits underwriters, investors, but also affects the efficiency of capital market in resource allocation.The price is nearing the expected price of secondary market or not, is the main standard to judge reasonability of IPO pricing. This paper analyzes company since opening year of the GEM. We found underpricing average more than 50%; the highest price rate is 209.7%; the first listed 28 companies underpricing rates generally higher than the company that Listed after the first, which is 106.23%. After the first listed, underpricing rate dramatically appeared down. From Yang Pu medical (300030) to Gao Xin Xing (300098) underpricing rate fell sharply, most of the company in this time underpricing rates lower than 50%, the average underpricing rate for this stage is 20.05%. After this the suppression, the underpricing rise again, which present a certain cyclical.This paper based on the information asymmetry theory and signal transmission theory, from the quality of listed companies, risk investment launch, institutional investors, and public investors analyzed how they affect IPO price. At aspect of the quality of listed companies, we select growth index, profitability index and assets operation ability index as a representative. At aspect of the risk investment effect, we describe investment risk with virtual variable description. And we choose Allotment proportion and winning rate represent institutional investors and public investors. We use multiple linear regression method research relationship the indexes of the four aspects with the IPO underpricing. We found that operating income growth, net profit margins and gem significantly associated to the IPO underpricing; allotment proportion which represent institutional investors, winning rate which represent investor's emotion have highly correlated to IPO underpricing, the biggest influence is the emotion Public investors. The results shows that the company with high operating income growth rate and high net profit margins which can deliver company growth good signal to investors, leading to underpricing rate decreasing, the higher Institutional investors to participate, the lower online issue, after the stock market, institutional investors can not sold within one year, negotiable stock limited scarce which cause prices compare, thus producing high antibacterial price rate. The emotions of public investors have an important influence in IPO underpricing, accord with Chinese stock market which is still a seller's market conditions, especially at Gem listing investment enthusiasm is extremely high.At last, from each significant influence factors of underpricing rate, which can be seen the biggest influence is winning rate, that is to say, the gem market investment enthusiasm is important influence factors. The fact that the influence of risk investment to the Gem IPO underpricing is not reflected. According to the empirical results, this paper put forward: firstly, in accelerating the process of market construction, improve the system construction, strengthen information disclosure, optimized the Gem market of financial ecological environment. Secondly, in insisting that fair, timely as core, based on the regulatory principles of various angles, we must set out improving the information disclosure quality GEM. Thirdly, strengthen the education of individual investors, while greatly cultivate and develop institutional investors.