Research On The Relationship Between Auditor Reputation And IPO Share Pricing In China’s Growth Enterprise Market

Since the reform and opening up, China’s small and medium enterprises have developed rapidly and has played a very important role in promoting economic growth. At the same time, however, the financing difficulties of small and medium enterprises is also very significant, the main founder of the China’s growth enterprise market is to support the development of high-tech enterprises, growing enterprises and SMEs, providing them with financing and venture capital available to the normal exit channel. Although, China’s capital market has a very big step forward in the two decades, but it is not very mature, corresponding mechanism still need further improve.The "three high" phenomenon (known as " high issue price, high issue price-earnings ratio and high raised funds ") is widespread in GEM primary market., there are also more serious phenomenon of IPO underpricing in Secondary market. Therefore, the study of China’s GEM IPO pricing has a certain theoretical and practical significance to improve China’s GEM market mechanism.For decades, a large number of foreign scholars have studied the IPO pricing and made a lot of hypotheses, Chinese scholars on the one hand studied to verify the applicability in China of the theory,on the other hand, studied IPO pricing from the perspective of the reputation of underwriters and distribution system reform, but empirical results failed to fully support one explain. The emergence and development of information economics and behavioral finance expanded the IPO pricing perspective, the reputation have access to the investigator. Because once the damage is difficult to recover, the reputation of the accounting firm occupies a very important position. The auditor as the third-party certification, investors can identify the IPO value of the enterprise as well as the quality of information from the reputation of the auditor. Therefore, this article is based on the perspective of auditor reputation, to explore whether the reputation of China’s Growth Enterprise Market of auditors can affect the IPO pricing.This paper applies data of222companies that are listed on Growth Enterprise Market from2009to2011as study sample, uses Ordinary Least Squares regression method to verify the Relationship between Auditor Reputation and IPO share pricing. The result shows insignificant positive relation between auditor reputation and company’s stock issue price and negative relation between auditor reputation and stock underpricing, but not significant. Overall, the reputation of the auditor has an important impact on the stock pricing. But this effect may be limited, auditor reputation mechanisms still need to further improve. Empirical Test of the relationship between auditor reputation and IPO Share Pricing in China’s Growth Enterprise market, rich the research in the IPO field, and has practical significance for the current high IPO underpricing.