A Study On The Initial Returns Of A Share's IPO

The initial returns of the initial public offerings (IPO) in the A share market in our country is always much higher than those at the average level in the foreign mature markets. After the reform of the share splitting, the average initial returns in the A share market is still very high and going up with the rising of the secondary market, though the offerings way has become more perfect. So, high initial returns of the initial public offerings in the A share market still is one of the long-standing distinguishing features of Chinese capital market. Making a comprehensive view on civil relative research, most of them were made against the background of share splitting. As the reform of share splitting has been accomplished successfully and the market where all shares are tradable has been set up, the factors influencing the initial returns may undergo some changes. It is positively significative for evaluating the reform of share splitting and exploring the promotion of the institutional reforms to analyse the initial returns and the relative factors timely according to the present situation of civil capital market.At first, this article analyses thoroughly the institutional characters of Chinese IPO issues and considers that the share splitting and the issue regulatory are two essential reasons of the high initial returns of the initial public offerings (IPO) in the A share market in our country. Secondly, this article selects one hundred and forty-three shares from 2004 to 2006 to set up three stepwise regression models and empirically investigates and comparatively analyses the initial returns of the A share and the factors influencing the initial returns round about the reform of the share splitting. The empirical result is that the investors'irrational price and excessive speculation in stocks directly cause the unusual initial returns in the A share market. The profit pattern of the investors'excessive speculation is formed in the background of the share splitting and controlled issuance, which is the essential reason resulting in the high initial returns in the A share market before the reform of the share splitting. So, this article makes the further test and verification on the result of the above institutional character analysis from the empirical point and view----the share splitting and the issue regulatory are the essential reasons to cause the high initial returns of the A shares before the reform of the share splitting. After the share splitting reform, the initial returns of the A share maintains high because of the system basis and the market condition. The author considers that the management administration ought to carry the reform of the issuing supervision system a step forward and loosen the restrictions on the stocks supply after the reform of the share splitting has been successfully finished. In the current market condition, in order to create an active condition to push on the further marketlization of the issuing supervision system, we must perfect the law system, regular the system of making the issue information public, strengthen the supervision on the medium agency and improve the investor structure and so on.