A Study On IPO Under-pricing Of GEM In China

Long-awaited mainland Growth Enterprise Market was established on October30,2009. This market undertakes a series of special tasks that is of great importance, such as to support medium and small enterprises whose strength are not strong enough, particularly the high-growth enterprises that are growing rapidly, to establish a normal exit strategy for venture capital of enterprises and venture capitalists, to provide a financing platform for national strategies of independent innovation, as well as to create conditions for different levels of capital market system, etc. Although the development of Growth Enterprise Market goes through ups and downs, however, it takes an even more important position in the economic and capital market.If we take a look at the international securities markets, especially the status of domestic stock market, it’s not difficult to find the phenomenon that IPO price is often lower.than the price of the first day of IPO; this is what is called Initial Public Offering under-pricing. Currently, there is no literature about the phenomenon of IPO under-pricing in mainland Growth Enterprise Market. How to treat this phenomenon, to identify its causes, and to propose solutions, is an important issue related to the healthy development of China’s Growth Enterprise Market. This paper attempts to use foreign (including Hong Kong) related researches for references, and on this basis, combines the methods of empirical research and theoretical analysis, to carry out a multi-analysis about the phenomenon of mainland Growth Enterprise Market under-pricing.This research mainly includes the following aspects:firstly, it analyzes the stock pricing model and the issue pricing related to Growth Enterprise Market IPO under-pricing. In the empirical research part, it carries out a statistical analysis for the GEM-listed companies listed from the GEM establishment in1999to early2011. Furthermore, by establishing the multi-factors regression model of IPO under-pricing, it does empirical tests about internal and external factors that influence the mainland Growth Enterprise Market IPO under-pricing.Through the systematic analysis and empirical results in this paper, Growth Enterprise Market IPO under-pricing phenomenon does exist in mainland. And because of the unique characteristics of the GEM mainland, foreign research results related to IPO under-pricing cannot be directly applied well to the mainland Growth Enterprise Market. On the basis of a comprehensive summary on mainland GEM IPO under-pricing, combines the situation of China, this paper finally puts forward that during the future GEM construction in China mainland, how to adopt market-oriented pricing mechanism to increase the trading efficiency and allocative efficiency of Mainland Growth Enterprise Market.