Research On IPO Underpricing Of GEM

IPO (Initial Public Offering) Underpricing refers to the phenomenon that on the the first trading day of the initial public offering, the closing price above the issue price. IPO underpricing phenomenon has shaken has shaken the two foundations of of modern financial theory t- the efficient market hypothesis and the arbitrage pricing theory. This paper attempts to conclude the ownership concentration, the venture capital and investor sentiment into the explain of IPO underpricing on the GEM market.First explored the relationship between equity concentration and the IPO underpricing of listed companies on the GEM with the theory of ownership structure, finding that GEM companies with high ownership concentration are difficult to give marginal contribution to the reducing of agency costs; from the perspective of equity balances of the company's board, one side dominance and the family business are two obvious characteristics of the GEM companies, prone to the action of large shareholder's expropriating of minority shareholders interests; high ownership concentration would inhibit the transfer mechanisms of control to founction. High ownership concentration will reduce investors'evaluation of the GEM companies. Then discussed the transmission mechanism between ownership concentration and the IPO underpricing, and finally proposed the hypothesis that ownership concentration is negatively related to IPO underpricing on the GEM market.Then turn to the next perspective of venture capital's on GEM companies'IPO underpricing, and proceed analysis from the view of intermediary certification, value-added services and adverse selection. As China's venture capital that has not established its outstanding reputation in the market, it is difficult to play its role of intermediary certification; and companies with venture capital supported has less family business color compared to the companies without venture capital shareholders, but this effect is not very obvious, it is difficult to identify the impact of internal governance of venture capital; in the difficult reality of SME financing environment, a prerequisite for adverse selection hypothesis is difficult to set up.This paper studied the relationship of investor sentiment and the IPO underpricing on GEM in turn. First to use different expectations theory to analyze the GEM environment, and from the noise traders and fanatical traders point of view to analyse the GEM IPO underpricing's producing mechanism.Finally, concluded China's current actual situation of the GEM, we select the degree of concentration of equity, venture capital and investor sentiment proxies, use linear regression model to verify a variety of factors and the rate of IPO underpricing. Found that ownership concentration are significantly negative related to the GEM IPO underpricing, and venture capital's role in IPO underpricing is not very obvious, the representative indicator of investor sentiment and IPO underpricing is significantly positively correlated. With the conclusions, the paper at the end put forward relevant proposals on thecstock distribution system, corporate governance and venture capitalists...