The Research On The Efficiency Of Underwriter Reputation Mechanism In IPO Market Of China

In Initial public offering market, underwriters play an important role as information producer and intermediaries, their reputation are not only connect with the long-run development of themselves, but also influence the financial securities issue market even the whole financial securities area. Therefore, the efficiency of the underwriter reputation mechanism in IPO market attracts the close attention of the researchers. However, the previous researches in China mostly use underwriters'market share as single index to assess underwriters'reputation. Considering the multiple aspects and complexity of the influence factors, this paper uses a multi-index system to evaluate the underwriters'reputation, which based on the principal components analysis method and the cluster analysis method. At the same time, making use of a multiple regression model, the research examines the efficiency of the underwriter reputation mechanism in IPO market of China.Firstly, this paper measures the IPO underpricing degree in financial securities market, and also reviews the theories concerned with underwriter reputation and reputation mechanism briefly. Then, it constructs a reputation evaluating indicator system which based on the influence factors of the underwriter reputation. On the basis of the evaluating indicator system, it measures the underwriters'reputation during reputation construction period by using the principal components analysis and the cluster analysis method. To consider the different situations when reputation value is continuous variable and discrete variable, the thesis designs two models based on the results of underwriter reputation measurement. Finally, by taking advantage of Carter-Manster model, this paper verifies the efficiency of underwriter reputation mechanism during underwriter examination period.The results show that underwriter reputation mechanism in China is invalid on the whole, for the correlation between underwriter reputation and the degree of IPO underpricing is not completely negative. According the above analysis, there are some kinds of reasons why underwriter reputation mechanism is not valid in IPO market of China, such as market structure's flaw, regulation's failure and so on. Based on that, we give out some suggestions to strength the efficiency of underwriter reputation in China at the end.