An Empirical Investigation Of IPO Underpricing In GEM Of China

The IPO (Initial Public Offerings) refers to the behavior of the issuer’s initial public offering the help of underwriters. IPO underpricing refers to the issue price of the stock market lower than the secondary market trading price, the specific performance listed on the first day closing price above the issue price for investors to participate in a market excess returns to form underpricing. According to efficient market theory, if the IPO underpricing will result in a continuous flow of funds from the secondary market-a market; general equilibrium theory is that the underpricing phenomenon can not long exist. In fact, studies have shown that the underpricing phenomenon widely exists in the national securities markets and mature markets, the degree of underpricing is less than in emerging markets.Since the inception of the GEM on October30,2009. As of February2012, a total of290stocks listed on the GEM, the "three highs phenomenon (high issue price, high issue price-earnings ratio, and superb raised funds)" extremely serious, and thepuzzling is that the IPO record "three high" at the same time, still maintained a higher underpricing, greatly reduces the efficiency of resource allocation for the GEM as well as increased investment risk factors not conducive to the healthy development of the GEM. In this paper, the characteristics of the GEM market in China, carefully study the literature of logic, sort out the summary of the theory of a variety of underpricing, from the analysis of the issuer in the IPO on the interests of the chain, investment banks and investors to identify potential impact of China Venture the board IPO underpricing influencing factors. Using stepwise regression analysis, the extract does affect IPO underpricing factor.The results show that:GEM underpricing fried hot "is still serious, substantial over-subscription to bring supply and demand, mainly in the primary market, secondary market to follow suit speculation" bandwagon effect "is also very obvious; the concept of emerging strategic industries, the investment bank reputation affect underpricing is not obvious, mainly because of the GEM are mostly associated with the emerging strategic industries, while investment bank homogenization of the more obvious; In addition, the prospectus information investors still more obvious role in the guidelines, reflecting the negative correlation between risk and underpricing revealed.