Underwriter Reputation Mechanism And IPO Opportunity

In china’s stock market，the role of underwriter has been continuously highlightedsince sponsor system implemented in2004.As the most important intermediate inIPO(Initial Public Offerings)， underwriter plays an important role in the process ofIPO application.The traditional reputation theory hold that underwriter reputation caneffectively alleviate the problem of information asymmetry.Therefore，if the reputableunderwriter have a good effect on alleviating the information asymmetry betweenissuers and IEC(Issuance Examination Committee)， accelerating listing process andhelping issuers obtaining IPO authorization.To solve these problems， a thoroughtheoretical analysis has been made first，then modeling to examine above hypotheses，and taking applicants on Main Board and GEM market from January2004to December2012.The empirical results show that underwriter reputation positively correlates withIEC’s review result，it implies that underwriter reputation is in favor of accessing to IPOauthorization.Moreover， switching to reputable underwriter is easier to pass forapplicants in reapplying for IPO.In addition， there is a strong negative correlationbetween underwriter reputation and listing time，it indicates that reputable underwritercan help to faster issuers’ listing process.To a certain extent， the contents and findings of this paper has originality andtimeliness，and enriches the study of underwriter reputation mechanism.