Case Analysis Of The Implementation Of Green Shoe Option On The China’s A-share Market

Green Shoe Option-a mature stock issuance supporting mechanism on the international stock market-has been introduced into China nearly two decades ago; the successful implementation of the Green Shoe Option in China’s B-share market provides an important reference to the A-share market. With the facts that China’s stock market is getting increasingly closer to the international markets; the acceleration of the marketization of China’s A-share market; the IPO Underpricing rate began declining and the Fall On Debut stock occurs more frequently; all of which indicates that China’s A-share market is ready for the implementation of the Green Shoe Option.Since the first implementation of a pilot Green Shoe Option in China’s A-share market in2001, there are three banks have successfully used the Green Shoe Option in their IPO. This thesis, based on detailed analysis of the implementation of Green Shoe Option on the China’s A-share market, found that the three banks have exercised the full or nearly full stock on Green Shoe Option to prop up the market. The success of the Green Shoe Option implementation in China’s A-share market also brought some problems. To explore solutions of low application rate of the Green Shoe Option on the China’s A Share Market, considering the impact of the Green Shoe Option for market intermediaries, issuers and investors, this paper suggests further improvement to the existing audit system, reduction of restrictions on the market fluctuation limits, introduction of associated measures of the Green Shoe Option and increase the transparency.