Analyzing The System Defect Of The IPO System In China's Growth Enterprises Market By Rate Of Return Through The First Day

Growth Enterprises Market (GEM) has problems in three aspects: the high issue price, the high price-earnings ratio and the amount raised superb. The core factor is the high issue price. Under the formula of Rate of return through the first day, we can find that high issue price will greatly reduce rate of return through the first day theoretically. But Ifind the high rate of return phenomenon on the first day by analyzingthe relevant data in the GEM.This paper reviews the paper about rate of return through the first day of the capital market and finds that there is little study of yield of the first day through the GEM of China IPO system. By analyzing the amended rate of return through the first day of CHINA's GEM we find that there is a very high risk. By analyzing the relevant GEM IPO system we point out the deficiencies of the GEM. Subsequently we use the regression analysis to verify and explain the imperfect factors that play a decisive role.Finally, issuing audit system has seriously affected China's Growth Enterprise Market IPO supply relationships, there is a serious shortage in the GEM, which prompting investors to speculate under high IPO price. The high rate of return in the first day is related to theirrational of GEM IPO system.The issuing audit system is the most important factor. Finally, four advicesis given to perfect the system,mainly about the issuingaudit system of the GEM in China.