The Empirical Research On The Effects Of The Reform Of IPO System On Underpricing

In the stock market, underpricing means the price of IPO (initial public offering) is extremely lower than the settlement in the first day of transaction; the investors can gain excessive initial profit through the price gaps between the primary market and the parallel market. Ever since Ibboston released his series of hypothesis on this topic in 1975, the research on the underpricing of IPO had become the hot issues in this field. It is found by the quantity of empirical research that this phenomenon is universal in most of countries, but there is still no convincing theory to explain about it. According to the massive research on it, this phenomenon is more serious in China, because of the speculative motive; it will affect the efficiency of finance market.In the Jun.2008, with the establishment of "The Guideline on the further reforming and perfecting the IPO system" by the China Security Regulatory Commission (CSRC), a new reform had begun. Difference with former reform, the degree of underpricing reduced obviously. Based on the statistic data, comparing with the situation before the reform, the rate of profit has reduced to 57.51% from 142.52%, so far, there is no further study on this topic. In this condition, this paper offers a systemic research and analysis, and the establishment of the new guideline is selected as the middle timing point.Here is the structure below:the first chapter is the introduction in which the background of Underpricing and reform is released, the second chapter reviewed series of relevant theory and empirical research on IPO. In the third chapter, the relevant factors and variables are selected, and the preliminary analysis is carried out, this part focus on the influent factors and the degree of underpricing. The forth one, the signal index and the multiple indexes linear regressing model are adopted to analyze the data which is selected before and after the reform, it can be seen that these factors are affected by the degree of underpricing and the measurement of reform, furthermore it is indicated that the reason why the degree of underpricing reduced dues to the reform of the IPO system.The last chapter summarizes the whole work, also the policy suggestion and deficiency in this paper are offered at last.