The Research Of Ownership Concentration Of Gem Companies On The Impact Of IPO Underpricing

IPO underpricing problem has always been the focus of domestic and overseas scholars. They are from different angles to explain the IPO underpricing phenomena, including ownership concentration which is considered to be one of the most important factors for the formation of IPO underpricing. But in the past literature, the influencing mechanism between ownership concentration and IPO underpricing does not have a clear and reasonable explanation, so we carried out an in-depth study for it. Some previous research literature showed that earnings management had a significant impact on IPO underpricing. And some other literature also showed that ownership concentration could affect on earnings management. So we think whether earnings management plays a role between ownership concentration and IPO underpricing. Based on the results of previous studies, we verified the relationship between ownership concentration and IPO underpricing for the research object being the coporations on GEM market. Besides, we considered corporate earning management behaviors in order to further investigate the transmission mechanism between ownership concentration and IPO underpricing.The article structure is as follows. Firstly we reviewed and combing the research background and literature at home and abroad. Then we selected GEM companies which the amount is355between2009and2012as the research sample, and did the empirical studies for the relationship among ownership concentration, earnings management and IPO underpricing. Finally synthesizing the theoretical and empirical analysis, we drawed the conclusions. First, the GEM companies’ ownership concentration effects on IPO underpricing negatively. Second, earnings management plays a conductive role between ownership concentration and IPO underpricing. Third, earnings management to some extent weakens the negative impact for ownership concentration on IPO underpricing. The rate of ownership concentration on the overall impact of IPO underpricing is-0.11. While the rate of the major shareholders of the enterprise trying to manage earnings to increase the impact of IPO underpricing is0.02.Additionally, we use Benford’s law to detect the exist of GEM IPO earnings management. Benford’s law could determine preliminary whether there is a earnings management behavior, and recognize the numerical characteristics of earnings management. Benford’s law is an auxiliary tool for researching earnings management behavior.