Stock Market Ipo Underpricing Reasons For Study

IPO's abnormal initial return (AIR) has been an anomaly existing in almost all stock markets. In the past sixty years, researchers have provided two explanations for this new issues puzzle. This paper analyzes AIR in China from under-pricing in the primary market. Financial regulations and investment risks due to information asymmetry and the segmentation of equity lead to severe IPO under-pricing in the primary market.This article is divided into five chapters.The first chapter is introduction.The second chapter explains deeply IPO ender-pricing and changing of stock regulation and stock public measures. The stock regulations in China can be divided into four stages, quantity management, index management, channels management and recommend and guarantee management. At the same time, the stock public measures suffer many different changing.The third chapter is the reason for IPO's under-pricing in China. The IPO's under-pricing of the primary market can be divided into risk under-pricing, prospect under-pricing and regulation under-pricing. The investment from risk Information asymmetry and share division asks that investors can be compensated by the form of risk under-pricing. Prospect under-pricing shows the influence of publishers' behavior departure. And the regulation system forms the regulation under-pricing in Chinese stock market.The forth chapter is the empirical of IPO's under-pricing in Chinese stock market. The empirical shows that our stock market generally has IPO's under-pricing. And in our stock market there are too many short-term investors. The pricing process of IPO does not exist. The high under-pricing rate is from arbitrage of the primary market and the second market.The fifth chapter is conclusion.This paper centers on the above topic by combining theory with practice and combining normative research and positive research. Tabulating method, graphic method and multiple regression model have been applied to the empirical analysis.