The Empirical Research Of The Correlation Between The IPO Underpricing And Irrational Investors

IPO market as a listing corporation continues to developing and a important financing channel, is the foundation of secondary market. However, the IPO market exists many problems, which cannot explain by classical financial theories. At home and abroad, the IPO market researches mainly focused on IPO long run underperformance, IPO underpricing and IPO hot issue market. The IPO underpricing is a hot research issue to behavioral finance scholar.The IPO underpricing is a phenomenon, that the stock closing price is far higher than the issue price. According to the efficient market hypothesis, competition of investors will make the stock price and its intrinsic value become equilibrium in a competitive market, so there is no stock underpricing in the first issue day. Unfortunately, in actual stock market, the IPO underpricing is a very common phenomenon. The IPO underpricing phenomenon will hinder the Primary market to play the function of resource allocation, which makes a serious negative effect to the stock market of our country.In order to explain the IPO underpricing phenomenon, and provide policy recommendations for the government decision-making. Firstly, introduce the related research background, research significance and research methods. Secondly, analysis the abroad and domestic research status of IPO, and summarizes the main reason of forming IPO underpricing. Thirdly, stock market is divided into rising, consolidation, downside three different periods. We select our country IPO data and make use of the regression analysis model of behavior financial theory. Following the regression results, we analysis the reason that IPO underpricing cause in china at different periods. At last, we make the policy recommendations about IPO and conclusions of this paper, According to empirical analysis results. Our research shows that IPO investor judge the stock real price not from the condition of enterprise oneself, but from its system pricing deviation effect. The IPO investors invest in the IPO market not for a long term investment, but for stock speculation. Excessive speculation causes new shares with high closing price on the first issue day, which makes a significant influence to the returns of new issuing shares.