Pricing Efficiency Of IPO Underpricing And Influencing Factors

In the primary stock market, the new shares are priced significantly lower thanthe closing price on the first listing day. It is so-called “IPO underpricing”. Thephenomenon of high IPO underpricing existed in almost every capital market in theworld, and it possibly came from the low offering price in the aftermarket or thecombination of both. In the developed capital country, scholars always assumed theeffectiveness of the aftermarket. So the cause was thought to be come from the lowpricing in the primary market. With the deeper research, scholars started to assumethe high pricing in the aftermarket.In the aftermarket, one reason may cause the underpricing is the conduct ofprice support and the other likely reason is the hectic of investors who follow thetrend of buying some certain shares due to the various level of professionknowledge.Firstly, this thesis briefly summarizes the emergence and development ofIPO underpricing and proposed the background and significance of the study offactors affecting IPOunderpricing and IPO pricing efficiency.Then it reviews theexisting literatures and proposed the contents to be studied in this paper.In this paper, Chapter4selected stocks listed in the A-share market in2005-2012to establish multiple regression models,studying the factors thatinfluence the IPO in the main board,the small board,and the GEM.It is proved thatinvestors’ sentiment significantly affects IPO underpricing in the secondary marketobviously; Chapter5makes IPO’s issue price as the output variables, and the keyfinancial indicators reflecting the company’s value as an input variable, while otherfactors that affect the efficiency of IPO pricing index as a non-stochastic frontieranalysis to prove that there is no low-level pricing behavior in the first market,which indicates that China ’s IPO underpricing is mainly produced on the first dayof the high price on the secondary market; Chapter6places standardizedcompounded rate of return of all IPOs20trading days continuously as a researchobject,the key financial indicators reflecting the company’s value as an inputvariable and the other factors that affect the efficiency of IPO pricing index as anon-stochastic frontier analysis to prove in a further way thatit is the underwritersthat prop up the market, thus proving the main conclusions of the first day of China ’s IPO underpricing entirely produced in the secondary market maniainvestors. Finally, this paper gives the results that could improve the efficiency ofthe IPO pricing suggestions.