Empirical Analysis Of China's Ipo Reform Of The Ipo Pricing Efficiency

Numbers of studies have found that IPO public offering prices are generally low. this underpricing phenomenon is fully reflected in the U.S. and other markets. The same problem is also happened in China. However, the purpose of this study is not to simply add another piece of evidence of this phenomenon, but to focus on the relationship between the rules and regulations and the IPO pricing efficiency.As an important measure of economic reform, China established exchanges in Shanghai and Shenzhen in 1990 and 1991. In the early development Chinese authorities played a leading role on the stock market. These controls made the market mechanism distorted and might lead to a huge IPO underpricing. April 1993, the regulations on stock issuance and trading management were promulgated, it marking the formal approval of the implementation of the authorizing system. Under this system, from choosing to releasing of the listed companies, the entire process was controlled by the government, the market did not effectively play the role of self-regulatory function, and the affection of intermediary institutions was limited in scope that could not guarantee the quality of listed companies. June 1999-March 2001 was the transition phase from the authorizing system to the approving system. April 2001 channel system launched, the formal approving system implemented. This system makes the market more flexibilale. and enterprises was requires to be responsible for their own public information.IPO pricing efficiency study to test the initial public offering of shares of listed companies (Initial Public Offerings) The offering price is reasonable. A measure of this "reasonable" and usually there are two ways:one is examine the "off" level between the IPO price and opening price listed on the first day, that is, underpricing rate, which is an absolute measure of IPO pricing; The other is through investigating the issue price reflects the business conditions and internal factors and external factors in the relationship between the use of elements of the issue price reflects the condition of the company to verify the pricing efficiency, that is. the relative measure of IPO pricing.This article also analysts a long-term earnings of IPO under the two systems. Using the Buy-and-hold abnormal return, Cumulative abnormal returns and Fama-French three-factor model as three indicators constant, by comparing the approval system and approval system under the IPO pricing efficiency, to illustrate the affection of the Stock Offering System reform on the efficiency of IPO pricing.