Study On IPO Underpricing Of A Shares In Chinese Security Market

Usually the closing price of IPO on the open market for the first time is far higher than its issue price, which makes the investors who subscribe IPO able to acquire a paranormal rate of return, and this is so - called IPO underpricing. A flood of empirical research done by foreign economists manifests, in the stock market of all countries around the world, the phenomenon of IPO underpricing is almost ubiquitous, and they put forward a good many hypothesis that have certain explanation power.Through reviewing our country's history of the transformation and reform of IPO offering system, early studies such as empirical analysis and research conclusion of IPO underpricing and its mechanism in the domestic stock market before split share structure reform, empirical research of A share IPOs after split share structure reform is done in this paper, finding the explanatory power of factors that affecting IPO underpricing in traditional theory unsatisfactory. And this paper designs the analytical method of the relative change rate of P/E ratio on this basis, and new empirical research of IPO in this period not only shows the phenomenon is not common in the traditional sense, but also shows that it is not only caused by the underpricing of the primary market but the short-term premium in the secondary market in the meantime. Therefore, this paper bring forward the concept of IPO different-pricing, which is a phenomenon ubiquitous in a short-term weak-form efficient and long term efficient market, and result of primary market, secondary market or combined action of both markets. Meanwhile the A share IPO different-pricing is formed by asymmetry of market information, irrationality of investors, and imperfection of IPO offering system.In order to achieve reasonable IPO pricing, we should reform our IPO offering system. Empirical analysis of the IPO in three month after the latest reform in June 2009 suggests for further reform: take into account of the features of different industries of the inquiry object, distinguish retail investors and institutional investors, and reform online subscription, registration system, and secondary market respectively.