Off-line Institutional Investors Purchase And Ipo Underpricing Relationship Of Empirical Research

Statistics show that most new issues were underpriced throughout the world’s main financial markets. There was no exception for our markets, however, since2010, a growing number of new IPOs performance overpriced for three month. This article focuses on the new issues’performance of three month absolute performance and three month comparative performance which excluded the market’s performance. This essay chooses601newly listed companies between Jan52010to Dec52011, sets issuing PE, excess raised capital ratio, exchange rate, issuing scale, success rate and issuing fee to raised capital ratio as the control variables, firstly, analyses the affect institutional investors’assigning shares to new issues’performance, then, distinguishes different institutional investors’effect to new issues’performance, lastly, finds the relationship between assigning share ratio and new issues’ underpricing degree.Results state that, institutional investors’assigning rate have significant positive effect to three month absolute performance, which means, larger the financial institutions’trading departments assigning ratiois, bigger the probability those new issues’over performed than the market, similar result shows for the institutions of private equity institutional investors’holding rate have significant relationship with new issues’underpricing extent, what’s more, when excludes the market’s return, there is positive relationship between them.This is due to the asymmetric information problem in China’s capital market. Institutional investors, especially the trading departments of security companies have the access to inside information that is unavailable to other investors. They can judge the quality of these companies by the acquired information; finally make decisions about the assigning share ratio. This action impairs other investors’benefit. In order to cure this problem we can enhance the information disclosure and supervision of listed companies. Only this way, can we establish more efficient market for the investors.