Research On The Relationship Between Underwriter 's Reputation And The Quality Of GEM IPO

China’s stock market has been implementing the sponsor system since 2004. According to this system, the underwriter is the “information producer” and “certification agency” for the stock market. Underwriter is responsible for the recommendation and guidance of listed companies, verifying the quality of information disclosed by IPO companies, and continuously supervises the listed companies within two years. Underwriters can ease the information asymmetry between companies and investors, thereby reducing investors’ risk. GEM companies have more operational uncertainties than the main market and more serious asymmetric information than the main market. Therefore, underwriters are more important for GEM. This paper aims to study the relationship between underwriter reputation and the quality of GEM IPO companies.In this paper, the manufacturing enterprises listed on the GEM in 2011 and 2012 were selected as the study sample. Then we used SPSS 20.0 to do the research by the methods of descriptive statistical analysis, correlation analysis, factor analysis, regression analysis and regulation analysis. The descriptive statistical analysis shows that underwriter reputation of the overall GEM IPO companies is at a low level. The regression analysis says that underwriter reputation and the quality of the GEM IPO companies showed a significant positive correlation. So the higher the underwriter reputation, the better the quality of GEM IPO companies. The regulation analysis says that the larger the underwriter, the more significant the positive correlation between underwriter reputation and the quality of GEM IPO companies. This indicates that the sponsor system in China’s GEM market has played a role of guiding for listed companies, underwriters and investors.The results of this study are supplement for the domestic related researches; because the domestic related researches are few and don’t have a consistent conclusion. And in practice, the results can guide investors to make underwriter reputation as a factor when judging the quality of GEM IPO companies. At the policy level, this paper raises some reasonable suggestions according to the empirical findings.