| All enterprises are in need of financing while developing. In primary stage of capital market, the only way for enterprises to ease their financial pressure was loaning funds. Then, with the development of modern capital markets, enterprises which put in satisfactory performance on operation can be IPOs to meet their financial needs. Although the IPO supervision system in China is becoming more stringent, there still are many uncertainties for regulators and investors to understand those IPOs. The ultimate success of IPO process depends on confirmation from the market. The regulators and investors are unable to gain internal information of the IPOs; the problem of information asymmetry exists among the IPOs, regulators and investors. February,2004, China Securities Regulatory Commission introduced sponsor system into our Capital Market for the first time, under which the sponsor shall comply with business rules and industry standards to be honest and diligent, to examine the issuers’ application documents and disclosed information presently and to supervise the issuers’ standardization of their operation. May in2006, the initial public offering and listing management approach also clear that the issuers shall ensure that the disclosed information is truthful, accurate and complete without false records, misleading statements or material omissions. Sponsors and their representatives should follow the diligence, the principle of honesty and trustworthiness, conscientiously carry out a prudent examination and counseling obligations, and they issued a prospectus of the authenticity, accuracy and completeness. Implemented in September2006, underwriting management approach also clear responsibilities and norms of behavior of the underwriter, the fundamental purpose of sponsor-underwriter’s system implementation is to solve the problems of the sector regulators and investors in the issuer information asymmetry and play as a fair and credible third-party certification in the issuance process. Sponsor-underwriters’ reputation produces a constrained role for their acts. Sponsor-underwriters continue to maintain and enhance their own reputation. Issuers believe poor reputations of the sponsor-underwriters have the poor negotiating and inquiring capacity, which partly lead to the result of a wrong judgment form the investor to new shares value. Regulators and investors think:reputable sponsor-underwriters are greater cost than the poor reputation of the sponsor-underwriters’ to fraud, reputable sponsor-underwriters often link in the enterprise owning good operate quality; therefore, sponsor-underwriters’ reputation mechanism plays the role of signal transduction in the IPO. Investors with information disadvantage can use the sponsor-underwriters reputation to make IPO investment decisions.To explore how the sponsor-underwriters’ reputation provides decision-useful information for investors, and how investors accurately use the sponsor-underwriters’ reputation to avoid adverse selection problem, this article demonstrations sponsor-underwriters’ reputation playing to alleviate information asymmetries and third-party certification intermediary function from sponsoring stage and underwriting stage, relationship of the sponsor-underwriters" reputation on the impact of IPO long-term performance. This article selects latest IPOs as the study sample in2006-2011, and hand-collects the IPO leading underwriter information in2005-2011, including in underwriting the IPO Number every year, underwriting IPO financing in the total IPO every year in the Total cost, Statistical induction:the percent of the IPO project past, the number of IPO market share, total IPO financing, market share and annual sponsor underwriting fees are alternative indicators of the sponsor-underwriters’ reputation. Taking into account of the endogenous problem, four characteristic values are all used the average between on the year of IPO and on the previous year of IPO. While drawing on the long-term performance of the other literature on the new shares. The article uses the latest shares’ long-term market performance and the issuer’s long-term operational performance to measure the long-term performance of the new shares. Long-term market performance is measured by investors’ long-term profit of holding the new shares,6months,12months,24months as three phases after the IPO, The article analysis rate of monthly return after the IPO for long-term operating performance from the points of income growth and profitability. The specific substitution is operating income growth rate and ROE, The article tests issuers’ operating performance listed on the year of IPO and the first full fiscal years and the second full fiscal year after IPO. This article forecasts the following conclusion:the better sponsor-underwriters’ reputation is, the more probability which the sponsor-underwriters will choose the good performance of listing companies for the IPO, investors long-term holders of the new shares after the listing, the higher investors gain, the better the market performance of new shares is, the better the issuer operating performance is.This paper is divided into six parts:Chapter Ⅰ:Introduction of explaining the scope, background, purpose, significance of this research, innovative research ideas and frameworksChapter Ⅱ:Literature Review from two aspects:sponsor-underwriters’ reputation and market performance,sponsor-underwriters’reputation and operating performance after IPO, and literature to make comments and summarize.Chapter Ⅲ:Theoretical Basis. This part analysis the asymmetric information theory and certification agency theory, combined with adverse selection, signaling, reputation constraint mechanism and self-serving principles to strive to provide a solid theoretical basis for this study.Chapter Ⅳ:Empirical study design. These parts describe the development of search hypotheses variable selection and design of regression model, and make explanations to sample selection and data sources.Chapter Ⅴ:Empirical analysis results. This part summarizes the descriptive statistics, correlation analysis of variables, empirical results, making reasonable planation on unexpected resultsChapter VI:Conclusion Recommendations, Inadequate and Prospects This part is.a comprehensive summary of this article, at the same time offers policy recommendations combining with research findings and summarize the lack of research in this article and the outlook of the late-stage study.Research conclusions:①the market performance model is validated, and there is a significant positive correlation between sponsor-underwriters’ reputation and IPO’s long-term market performance. Specifically, a significant positive correlation exists between the reputation characteristics over past rate of IPO and the sponsors ’underwriting fees and the investors’ gain of the market excess return from long-term holding of the shares; investors gain more market excess return from long-term holding of the shares introduced by the sponsor-underwriters with good reputation than from long-term holding of the shares introduced by those with poor reputation.②The operating performance model is not validated. There is no significant correlation between sponsor-underwriters’reputation and IPOs’long-term operating performance in the continuous supervision period. Another finding is that, in the continuous supervision period, the longer the shares have been issued, the more significant the negative correlation between the sponsor-underwriters’reputation characteristic value and the IPOs’operating performance, which demonstrates that there might be correlation between the sponsor-underwriters’reputation and IPOs’poor operating performance after issuing. Possible explanation is:in order to obtain higher sponsor underwriting fees, the sponsor-underwriters adversely select enterprises with poor operating performance and high risks as intended IPOs. The sponsor-underwriters firstly "help" the issuers to raise operating results in order to achieve the purpose of IPO. Then, after two years, their operating performance declines to normal level. Or, the issuers with poor performance, taking into account sponsor-underwriters with good reputation who are good at "making-up" enterprises and blend with regulators has higher IPO pass rate, provide high underwriting fees to induce those sponsor-underwriters to take risks to cooperate with them. On the other hand, sponsor-underwriters may take the risks considering that supervision is not strict and future benefits from the risks outweigh future losses brought by disrepute.So, the sponsor-underwriters’ reputation plays a different role between sponsor stage and the underwriting stage. Sponsor-underwriters’reputation exists constraint in some periods, it can’t be lumped under one head, as the sponsor-underwriter’s reputation alleviates information asymmetries, and plays a certification intermediary.The main innovations of this paper:Firstly, the existing literature all focused on the research of the underwriters’ reputation, there is no literature which studied sponsor and underwriter’s union reputation paly a common affection on the performance of the issuer in the context of the sponsor system, the first time is in this article. The paper, based on the sponsor from screening enterprise quality of company, to listing to the issuer recommended guidance, the underwriters inquiry and underwritten on the IPO pricing, there is an in-depth study that the sponsor-underwriters fulfilled the functions and the role in the listing activities of the issuer, there is no literature made such a depth study to the reputation of the sponsor-underwritersSecondly, existing researches on the underwriters’reputation measure mostly from the China Securities Regulatory Commission announced the number and financing of underwriting IPO at the end of every year, or using a simple weighted for that, the article uses data only from the IPO starting process to measure the sponsor-underwriters’ reputation, no including the non-underwriting business of securities companies, followed by the sponsor-underwriters’ IPO pass rate,the market share of annual number of IPO, the market share of annual financing of IPO, and sponsor underwriting the fees of annual totals, as the reputation of the alternative indicators, which greatly enriched the sponsor-underwriters reputation mechanism. It is the first time to use IPO pass rate to measure the sponsor-underwriters’ reputation in this article.Thirdly, most of the existing research among the underwriter reputation with IPO pricing and underpricing, the issue of efficiency and institutional innovation, there is no literature rarely to research sponsor-underwriters’ reputation and IPO long-term market performance and operating performance, this article investigates the relationship between the sponsor-underwriters’reputation since2006and investors’ market excess returns by long-term holding of new shares in the context of the sponsor system, and the relationship with growth and profitability of the operating results of the listed issuer. We make the following discovery firstly, that is, there is a stage exists in the role of underwriter reputation mechanism, and it exists differentiate on the affection from different reputation to new shares long-term performance... |
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