Chinese Ipo Underpricing

IPOs(Initial Public Offers) underpricing is a ubiquitous problem in many countries' markets, and attract considerable attention from overseas and domestic scholars. In China's IPOs market, the rate of IPOs underpricing is not only much higher than that in developed countries, but also higher than that in the countries and regions of the same level. So it's called "tale of IPOs". The problems are how IPOs underpricing comes into being, why the IPOs underpricing rate is so high in China, and what's the difference between theory and reality. They are realistic problems in our IPOs market, which need to be studied in this dissertation. Starting from the root of the problem, on the basis of the existed theories, I deduced my dissertation step by step, and draw conclusions. Firstly, the thesis analyzes the existed theories, and concludes that according to foreign scholars' theories, IPOs underpricing is regarded as transaction cost and risk compensation, while in China, the conditions to apply these theories are not satisfied. The main difference lies in issuing system. Secondly, it compares and analyzes issuing system. Then the thesis arrives at the conclusion that the pricing of IPOs in developed countries is more dependant on the market, while in our country it falls back more on the administrative measures, and IPOs underpricing is just like administrative cost. During the process of administrative pricing, everything is decided by relevant administrative sectors, therefore the price and the supply of IPOs are controlled, the rate of IPOs underpricing is extraordinarily high, efficiency of the market has been lost, and the participants of the market are lack of impetus. Since 1999, our IPOs market has experienced a series of reform, which aimed to form a market-deciding IPOs pricing system. In theory, the reformatory measures can help to construct market-deciding pricing mechanism and reduce the degree of IPOs underpricing, but with positive analysis, I has found the gap between theory and reality. The main reasons are as follows: our country's pricing system is still controlled by administration to some degree, and the situation of our market hinders the reformatory measures from exerting its effect.The novelty of this dissertation lies in that I always study problems with a developing vision. That means that I put the problems into a changing environment, and give the problems new research meaning. In addition, comparisons run though the whole dissertation. Though the comparison I present my questions, find the key to study the problem, and achieve the conclusion of my research.The main contents are as follows:The first chapter is the review of research. Through the review of how IPOs underpricing was found, I present my first question: how the IPOs underpricing is formed? We can find answers from the theories or researches of the overseas scholars. But whether these theories apply to China? Why the degree of IPOs underpricing is so high in our country? These questions are the purposes of my research. The second chapter deals with the comparison of IPOs system.This chapter compares and analyzes IPOs system from two aspects: issuing supervision system and issuing pricing mode. With the comparison and analysis, we can know why the rate of IPOs underpricing in developed countries is lower than that in developing countries and regions. But no matter how good the system in developed countries is, the system should correspond to the degree of the market's development.The main issuing supervision systems are registration system together with check and ratification system. The registration system depends on the market to transfer information, consequently it's highly efficient, and the degree of ex ante can be reduced. The check and ratification system will induce corruption and prick up information asymmetry with the interference of administration.There are four vulgate issuing pricing modes. Book-building is better than any others in the transfer of info...