Research On The IPO Under Pricing Of The GEM In China

October 30,2009,As China's first batch of 28 stocks started trading on Growth Enterprises Market,GEM finally succeeded in landing the Shenzhen Stock Exchange after preparation for many years.The foundation of GEM will provide an important platform for development of high-tech,high growth enterprise,and it exerts as an important component and plays an extremely significant role in China's stock market.However, compared with Western countries, China's economy is still in transition period and far from perfect market economy. Excessive speculation, disorderly flow of huge amounts of money in capital market have occurred from time to time,which has fundamentally prevented the optimal allocation of resources in the capital market. As a key part for company that first raise funds and be listed in exchange, high underpricing phenomenon in IPO market often occurs.This phenomenon is also of great concern to academics and many scholars have researched this thesis in-depth system. However, during past one more years, IPO underpricing phenomenon in GEM is particularly serious. Closing price of listed companies on the first day drives record higher and higher. Strong market speculation atmosphere has greatly hindered the healthy and orderly development of the GEM. Therefore, this thesis combines theoretical analysis and empirical research to make a comprehensive study of IPO underpricing phenomenon on GEM,which has some theoretical and practical significance for improving the efficiency of small company and the GEM operating envitonment.Firstly, this article introduce the purpose and significance of the study, describe the object of study,research methods and innovations.Followed by introduction of Western mainstream theory about IPO Underpricing,we have got a comprehensive review of the research done by several scholars on the SME board and GEM IPO Underpricing problems.Then,we take the combination of traditional economic theory and characteristics of GEM,by joining venture capital, venture capital institutions, and industry characteristics as control variables, select 16 explanatory variables from the primary market and secondary that may affect IPO underpricing. Through statistical analysis, correlation test and multiple linear stepwise regression method, it's concluded that there are six factors that influence IPO Underpricing. Finally, we make a summary of research results and give some policy recommendations accordingly to GEM's IPO underpricing phenomenon.