The Analysis Of VC-backed Companies Which Are Underpricing In Initial Public Offerings In China's Small And Medium Enterprise Board

IPO underpricing phenomenon exists in all countries'stock markets. At the same time, Venture capital develops quickly in worldwide, and one of its main exiting channels is initial public offering. Therefore, many scholars combined both studies to analysis the influence in the rate of IPO underpricing in VC-backed companies. The international community gradually formed two types of theories: certification theory and reputation theory. In recent years, China's venture capital has been greatly developed and the IPO underpricing phenomenon is particularly serious in our country. It is important to research the influence of venture capital's participating in companies'IPO underpricing rate.In this paper, According to the availability of the information, I use the data about Chinese-funded companies which listed in SME board and Hong Kong main board as the sample. By regression analysis and variance analysis, we can obtain that the participating of venture capital plays a certification role in IPO in the Hong Kong market, while it doesn't affect in SME board. In analyzing of the reason, the paper use statistical analysis and theoretical logic to proof certification theory and reputation theory are not applicable in our country. Meanwhile, from the result of previous empirical analysis, we can see that it is very different for Chinese-funded companies listed in the two markets. So, the paper use the comparison of system and investors between Chinese mainland and Hong Kong to explore the reason why VC-backed companies in SME board are underpricing in IPO. Through a series of analysis we can draw the following conclusions: In SME board, institutional factor is the common cause of IPO underpricing. Investor irrationality is the main reason for VC-backed companies are higher than non VC-backed companies in IPO underpricing. Finally suggestions are proposed from the aspects of system and market.