Research On The Influence Of Ownership Structure On The IPO Under-pricing Of The GEM In China

IPO underpricing is the phenomenon of the initial public offering issue price lower than the market price after listing, which is also a common case in the world. That’s the mystery of IPO. Since Logue, IPO underpricing issue has been the focus of academic research, many scholars have conducted extensive research, and put forward many theories,such as asymmetric information. Chinese capital market started late, regulatory system is not perfect, investors need to be mature, and because of operational risks, IPO underpricing problems of listed companies are more obvious in the Growth Enterprise Market. For extremely high IPO underpricing of GEM, on the one hand, the secondary market flocked to buy new shares, that’s very injustice for the primary and secondary markets and secondary market inside, and the capital market is not conducive to healthy and sustainable development. One the other hand, extremely high discount also undermines the interests of the original shareholders, which is not conducive to the GEM listed company’s own financing and governance. Therefore, it is urgent to reduce the discount level and improve the issuance system.Many Chinese scholars believe that external factor is the main cause of high IPO true underpricing, especially institutional factors, also the GEM.GEM listed companies of uncertainty in technology and the market, exacerbating the problem of high IPO of underpricing. However, our GEM listed companies are mostly family or personal holding, before listing, a large number of private equity firms and venture capital firms joint-stock. The motives of these "original shareholders" investment and financing are different, also different in interests and needs. The policies such as holding period requirements are different, this article has strong interested in the relationship between GEM equity structure and IPO underpricing. Therefore, this article start from ownership structure, making research in the affect of ownership concentration, ownership balancing degree, shareholders constitute for the GEM IPO underpricing.Targeting on GEM listed companies, by selecting all the 406 companies listed up to 31 st Dec 2014 as research sample, this article carries out standard and empirical research on relationship between equity structure and IPO underpricing, according to Chinese capital market reality and with reference of oversea classic models. The empirical research concludes that there is negative correlation between rate of IPO underpricing and share proportion of senior management,legal person,non-restrict stock. I.e. the higher the share proportion of senior management,legal person,non-strict stock, the less the stock rise scope in IPO first day, and the lower the IPO underpricing rate. While the share ownership concentration /equity restriction ratios and the proportion of venture capital holdings are non-significant with IPO underpricing.This article therefore concludes that it will help reduce IPO underpricing to enlarge the issue scale of non-strict stock, to strength institutional investor cultivation, and to create loose external policy environment and encourage their venture investments. Furthermore, the latter is also good for financing and cultivation of start-up enterprises.Meanwhile, to encourage GEM listed companies to issue more share to management can not only encourage their role in company performance and management, but it is also helps for value return of IPO issue price.