China’s IPO Reforms Bringing Impact On Efficiency Of The Security Market

Since China’s securities market was established in the1990s, the IPO institutional change many times, and the access mechanism has gone through the Examination and approval system, the channel system and the Recommendation System, the mode of pricing also changed repeatedly. However, with the introduction of the IPO reform, the high share issue price, high price-earnings ratio, and Ultra-raised funds has not been improved significantly with the IPO reform and the efficiency of the stock market has been called into questions continuously. At the same time, the facts that Securities market development deviates from the economic growth in China and the Shanghai Composite Index10-year yield is back to zero become the focus of media attention, despite the divergence of the mature markets and our security market, different scholars interpret the situation from different angles, but the academic circles pay much attention to the under-pricing of new shares or long-term benefits of holding new shares in the doldrums.but the theory basing on information economics provides a new perspective for us in studying the effect of the IPO system reforms.The paper found through research that in the stage of strong administrative intervention, although the Fluctuation of shares price performed high asynchronous feature, but it only shows that shares price lost the functional performance of reflecting characteristics information of listed companies, the stock prices was seriously distorted. Subsequently, with the establishment of the principle of market-oriented reforms about the issue of new shares, the stock prices began to show part of information of the fundamentals of listed companies that the main market players understood, especially the implementation of the sponsor system and inquiry system on IPO, the stock price information had been greatly improved, reflecting that IPO reform has indeed achieved some results. But the paper held different viewpoints about the effect of this period’s reforms in the IPO system after Empirical research, that is, the first phase of reform in the IPO system failed to enhance the stock price information content, the second stage of reforms achieved a little better effect than the first period of reforms in the IPO system.the paper thought Regulatory bodies pay too much attention to the implementation of new subscription constraints in the first phase reform, which will contribute to the arbitrariness of the inquiry objects in offering price of IPO,yet the second stage granted the underwriters a certain degree of decentralization, and independent recommendation about some inquiry objects and listing of new shares in the small board and GEM no longer executed accumulating bidding inquiry, these measures strengthened the constraints about inquiry objects in offering prices. And prompted the real quote of the price of the inquiry objects, and formed the intrinsic motivation to urge the inquiry objects to dig out Characteristics information of listed company, and thus enhance the information content of stock prices.