Analyze The Factors Of IPO Fell On Its First Day Of Trading

New Issuance Puzzles （including IPOs under-pricing， long-term weakperformance，and hot market phenomenon）,based on IPOs pricing efficiency，attractmost attention of scholars in modern financial field. Compared to most of the othercountries in the world，China’s market presents the most prominent anomalies in IPOs.But in recent years the appearance of the IPO fell on its first day of trading triggers aseries of new problems. As an emerging market which belongs to an economy evolvingfrom a centered-planned one into a market-oriented one，IPO market is largely undergovernment’s control， which incurs investors’ irrational behavior. All thesecharacteristics make it perform differently from developed markets and other emergingmarkets.Through theoretical analysis and empirical test and normative analysis, thinkingthat in the long run the changes of the IPO stock offering system is the first factor of theIPO fell on its first day of trading. Although not directly factors, the function cannot beignored. In order to improve IPOs pricing efficiency, China’s regulator has transformedIPOs supervision and pricing policy several times. Investor Sentiment is the directfactors IPO fell on its first day of trading. Especially in the market pessimism condition,by investors Investor Sentiment influence the probability of IPO fell on its first day oftrading will increase greatly. With the new book-building system the main factor of theIPO fell on its first day of trading is Investor Sentiment over the past two years.Introduction part includes the study incentives, logic frames, study methods,difficulties and innovations. Then the literature summary summarizes the production ofIPO initial return from home and abroad. From stock offering system and InvestorSentiment, the paper analyzes the cause of the IPO fell on its first day of trading andmake demonstration estimate about these issues. The last part is conclusion and gives policy proposals.