The Analysis Of IPO Underpricing For Chinese Market Under Inquiry System

IPO underpricing is one of the most excited themes in financial research. Researchers call it a puzzle because of its complication. Although many theories have been provided, no one can be totally accepted by financial researcher. An important presumption about these underpricing theories in western literatures is the efficient capital market. So, in order to better explain our IPO problem, we must modify the models that brought forward by western researcher because of the high speculative atmosphere. In this paper. I will decompose the total underpricing into two parts that called ex ante underpricing and ex post underpricing, and analysis the IPO problem of Chinese market under inquiry system based on the irrational investor. I will prove that the causes of ex ante and ex post underpricing are different using a new overreaction model from a total new perspective.