An Empirical Study On The Approval Examination And Verification Of Issuance Examination And Verification Commission

Securities markets has achieved a great deal since its establishment in china, which plays a key role in national economy. But as a result of the market failure phenomenons as information asymmetry, externality, there are frequent isolations and ofregulations. These illegal acts not only affect the healthy development of securities markets badly, but also seriously damage the investors'interest.As the basic market of stock, the issuance market has a key role in the development of whole capital market. Developed markets and emerging markets both established relative complete institution of securities issuing supervision and management to regulate securities issuing and protect investor's interests. The issuance system experiences examnation and approval system for our conditions. Examination and verification system as a result of Planned economy, has a positive influence on the economy at first stage. With the development of the ecnomy, the planned economey system isn't appropriate for the new situation, and then the approval system replaces examnation system accordingly.The Issuance Examination and Verification Commission was established in1999, which means our issuance market getting into a new stage. The China Securities Regulatory Commission didn't disclosure the list of Issuance Examination and Verification Commission, which adds the difficulty of PR. For the reason of asymmetric information and lacking of supervision, the issuance examination was affected by imprudence and rent-seeking activities. To improve the efficiency of the stock issuance examination and verification, Issuance Examination and Verification Commission applies measures issued by the State Council in 2003,which demands the China Securities Regulatory Commission to disclosure the list of the Issuance Examination and Verification Commission who participate in the stock issuance examination. The discipline of accountability mechanism and information transparency strengthen the supervision and restraint of Issuance Examination and Verification Commission publicly, Maintaining the better corporations and weeding out the inferior corporations or those that have the defrauding behaviors. By examing and approving the corporations, the quality of public companies is somewhat guaranteed preliminary.This paper using the sample of 2006 to 2009 with the data which disclosured by the enterprises in CSRC's website. With theoretical assumptions of the behaviour of the Issuance Examination and Verification Commission, we use binary logistic regression model for empirical research to find some way to improve China's system of initial public offerings.The empirical research shows that:(1) the approval examination and verification reflects well for the rule of prudence, because of accountability mechanism, the members in committee in order to protect their own reputation, they tend to choose the company with little uncertainty factors. (2) the approval examination and verification reflects well for the principle of independence, the probability of passing the audit has no relation with the index changes of stock market. (3) the approval examination and verification can not reflect fairness well, the ownership has a high correlation with the probability of passing the audit. (4) the approval examination and verification can hardly reflect efficiency, the company's ability of growth can 't be reflected, only the background of board of directors has relation with the approval examination and verification.The studies have the following meanings :firstly, this studies is a new attempt in the theory, this paper has certain innovation with the object of study and research ideas .Using the data which disclosured by the enterprises in CSRC's website, we can open the'black box'of Issuance Examination and Verification Commission indirectly which has certain reference value for future research on stock issuance regulation .Then the paper has lots of practical value. The research result is useful for improving China's system of initial public offerings, the result shows that :although our system has great progress compared with the time before the establishment of the committee, the fairness and efficiency have no relation with the examination and verification of the committee. In order to improve China's initial public offerings Audit system , we must change our standpoint that our market gives service to the State-owned share which appears at the beginning of the stock market, All market participants are equal in our market. The Issuance Examination and Verification Commission should pay more attention to the selection of high growth companies in order to improve efficiency while take prudent into consideration. On the other hand , this paper is useful for the enterprises that will go public , the enterprises can use the result to find out which factors affect the committee's examination and verification when preparing for the initial public offerings, so as to pass the audit easily .