Time Lost Waiting For IPO And IPO Underpricing: Analysis Of Influencing Factor On Issuing

The capital market in the background of China's economic transformation and upgrading, entered a new stage, and will facilitate the financing for SMEs (Small and Medium Enterprises), helping Chinese economy to regain dynamic growth. Meanwhile, the Registration-based IPO System has been confirmed by several regulators, who claimed that the new system is under legal review and revise.SME financing problems have been plaguing the government and industry. Banks, in order to avoid the loss of loan assets, didn't help with SMEs'financing. And the stock market sets goals which SMEs are often unable to meet. In October 2009, the establishment of GEM (Growth Enterprise Market) greatly facilitated the SMEs raising funds through the equity method. As of March 2016, the number of companies listed on GEM has rocketed to 500, with a total market value of 4.5 trillion RMB.This paper focuses on two main issues concerned during corporate finance: time lost waiting for IPO, and the IPO underpricing. By research on the major influencing factors of these two issues under Merit Regulation System, we could forecast the efficiency of SME financing on GEM.Based on the previous study on IPO system and pricing system, and combined with the author's own research, this paper conducted empirical research on the time lost waiting for IPO and the IPO underpricing, using quantitative methods. Besides, this paper uses WIND and CSMAR database as the source of data, and finishes the analysis by EVIEWS. The data consist of relevant information of 311 stocks issued between 2010 and 2012 on GEM. The explanatory variables fall into categories such as basic information, issuers' financial information, market condition and speculation.Through the empirical research, this paper draws the following conclusions:1. Factors that significantly affect the time lost waiting for IPO, are all in the range of market condition. This reflects that, the political goals of regulatory Time Lost Waiting for IPO and IPO Underpricing:Analysis of Influencing Factor on Issuing authorities greatly affect IPO under the Merit Regulation System.2. Significant factors of the IPO underpricing can be attributed to the speculation on the stock market. This shows that fierce speculation pushed up the stock price on the secondary market, but does not reflect any low efficiency of financing. Such high prices on the secondary market is neither rational nor sustainable, so the IPO underpricing doesn't mean that issuing price on the primary market should be raised.According to the conclusions of the empirical study, this paper makes following judgments on the efficiency of SME financing under Registration-based IPO System, on GEM:(1) The time lost waiting for IPO would be shortened, but regulatory interventions still pose a threat on efficiency. (2) The degree of IPO underpricing is expected to fall, but it does not mean any enhance on efficiency of IPO; and regulatory interventions under specific condition still matters.This paper makes following suggestions:(1) Upgrade the system construction on stock market, reducing administrative interventions. (2) Emphasize on the education of individual investors, eliminating speculations on the secondary market. (3) Strengthen the investigation and punishment on criminal behavior, to promote the fairness and justice on securities market.The innovations in this paper are in the following areas:(1) This article has taken a special perspective from the stock issuers. (2) This paper raised a rarely discussed topic:time lost waiting for IPO. (3) Based on studying the behavior of regulatory agencies, this paper upgraded the econometric model raised by previous scholars. (4) Speculate the situation under Registration-based IPO System, through the study on the current IPO system.Shortcomings of this paper are:(1) Due to policy changes and administrative interventions of regulators, recent data can't be used to generate the conclusions. (2) Information disclosure is always available after IPO, so some variables cannot be showed in the exact data. (3) Some important issues concerned by regulatory authorities cannot be quantized, therefore cannot be accounted in the empirical research.