An Empirical Analysis Of Chinese IPO High Underpricing

This paper is one of relative results of "Research on price pressure from large , high-quality enterprises listed in the domestic market" in "2006 Shanghai Stock Exchange 16th joint research projects".Statistics show that since the establishment of Chinese securities market, the short-term yield is very high, for the phenomenon of IPO underpricing. The long-term existence of IPO underpricing will affect the pricing efficiency, lead to unreasonable distribution of resources, and violation of the "Sangong" principle of "fair, just and open".This paper explores the factors that affect IPO underpricing rate through empirical research methods, and then concludes causes of high IPO underpricing. The empirical results show that different distribution systems, stock exchange rate, issue price-earnings ratio and etc. would affect the rate of IPO underpricing. After in-depth analysis, this paper concludes that Chinese high IPO underpricing is because there is a serious imbalance between supply and demand in Chinese securities market; Chinese investors are not mature enough. Finally on this basis, this paper supplies measures and proposals to reduce IPO underpricing degree.