Timing Of The Initial Public Offering Reform And Process Of The Registration System Reform

The initial public offering(IPO)reform has been one of the most important reforms of the Chinese capital markets and it has received much public attention.As China's stock market develops,the trend has emerged that the current IPO system no longer fits into the rapidly evolving market.Deepening the IPO reform has become an important task for the policymakers to promote the growth of the Chinese economy as well as the development of a healthy capital market.The stock market crash that occurred in the summer of last year has prompted the Chinese regulators,experts and investors to re-examine the process of the IPO reform.The path and the timing of the reform has become the focus of the regulators and the public.This paper first lays out the definition of the new share issuance system,and compares the registration-based IPO system and approval-based system in the United States and Hong Kong markets.Then it reviews major rounds of IPO reform and the timing of the launch of the each reform in China since early 1990 s with the purpose of analyzing the how the external conditions affected the effectiveness of the reform.It examined the external conditions from three perspectives,which are the condition of the macro-economy,the development of the stock market and the legal environment and draw the conclusion that the launch of major reform cannot be separated with external conditions.To verify the relevance between the effectiveness of the reform and the external conditions,the paper uses multiple linear regression method to make quantitative analysis,which showed correlation between the two factors.Further reform and the introduction of the registration-based IPO system in China are necessary but the current conditions are not mature at the moment.Policymakers and regulator should facilitate a gradual transition from the approval-based system to the registration-based one in a progressive way.