Empirical Analysis Of Ipo Underpricing Issue In A-share Stock Market In China

In the end of 1960, the scholar in the west found that there is an abnormal phenomenon in the security market—IPO underpricing.After that, the scholar all over the world found that IPO underpricing exited in every country including developed country and developing country by empirical study. IPO underpricing also exist in China's stock market, its degree is much higher than other countries, not only higher than that of developed capital markets, even higher than that of many developing countries. The degree of IPO underpricing reflects market-oriented and efficiency of the IPO issue and the level of China's higher degree of IPO underpricing reflects the lower degree of China's securities market and the less efficient of the issue market. In this paper, I am trying to identify the factor of high level of IPO underpricing in the Chinese A-share market on the basis of the domestic and foreign scholars'study and the actual situation of China's stock market.This article uses the quantitative and qualitative analysis method. First, reviewing the research literature of IPO underpricing written by domestic and foreign scholars and identifying the deficiencies exiting in the domestic and international research results. Secondly, take 1313 new stocks of initial public offerings in Shanghai and Shenzhen from May 18,2006 to December 31,2009 as a data and do statistic analysis to identify the degree of impact on IPO underpricing by total sample and industry.Then, using factor analysis to process the company's financial data, market data and use stepwise method to establish the multi-dimensional return model and do multi-factors analysis about the influence factor of IPO underpricing. On the basis of empirical study, analyzing the motivation of the different market main bodies, the degree of IPO underpricing is, in fact,affected by many factors in the entire stock market. China's IPO underpricing is the result of the issue market system, over-react of market main bodies,the degree of development of capital markets. Finally, in view of the problem of Chinese A-share IPO market, put forward proposals to resolve the IPO underpricing.