An Empirical Study On The IPO Underpricing Influence Factors Of The GEM In China

On October23rd,2009, the Shenzhen Stock Exchange launched the GrowthEnterprise Market (GEM), which not only promotes the development of new high-techindustry, but also further perfects our country multi-layer capital market system.Compared with western mature capital market, the capital market in China is still anemerging capital market with faulty market system and serious IPO underpricingphenomenon. High IPO underpricing rate will lead to the investors to pursue the newstock frantically. A serious consequence is that the massive funds are stored in theprimary market and this is detrimental to the resources optimization deployment. Andanother result is that the capital market is flooded with strong congenial atmospherewhich seriously affects the steady development of capital market in China. So, thispaper studies the problem on the GEM IPO underpricing.This paper reviews the relevant foreign IPO underpricing theory and combinatesour country’s system of issuing new shares, not only builds the IPO underpricingtheories frame of GEM, but also theoretical analyzes the IPO underpricing influentialfactors of GEM board, then, brings forward the hypotheses and model of empiricalresearch. Finally, this paper selects listed companies on GEM board from October30th,2009to March31th,2012, using statistical analysis，correlation analysis andstepwise regression method to find the key factors of the IPO underpricing on GEM inorder to widen financing channel of SME.The empirical results indicate: firstly, the GEM have severe IPO underpricingphenomenon and there is no significant difference on the IPO underpricing ratebetween GEM board and SME board in China, but the guiding role to IPO market ofreputation underwriters is appearing gradually. Secondly, it is found that the maininfluential factors of IPO underpricing rate on the GEM board are summarized in fiveaspects, such as: the market atmosphere, speculative mood of investors, issuanceauditing system, reputation underwriters, and the listed company’s size. At last, thispaper presents some feasible countermeasures to suppress the level IPO underpricingon GEM.