Research On The Factors Affecting IPO Underpricing In China's Growth Enterprise Market

It has been over seven years since the foundation of Chinese growth enterprise market.There were 587 enterprises in total,nearly equivalent to 6000 billion RMB,listed in the growth enterprise market at the end of 2016 with the fundraising volume amount to 300 billion RMB.The setup of growth enterprise market plays important roles in the development of innovative company and key ways to share the accomplishment of national economy for investors as well as the support of economic construction,the deepening of reform and the economic transformation,etc.Growth enterprise market on its right track is significant to Chinese healthy capital market and the steady growth of national economy.Different from the overseas well-established capital market,the growth enterprise market in our country has confronted three highs exclusively(high issue price,high IPO P/E ratio,high super raise funds).Along with the three highs,the high IPO underpricing is a puzzle for theorist and practitioner as well,which is particularly serious in Chinese growth enterprise market.In recent years,with the market and reform moving forward,IPO underpricing ratio is still above level in the world though the speed of it has slowed down.Specialists at home and abroad has researched it from the perspective of asymmetric information and behavioral finance etc.Without any well-accepted conclusions due to differences of time period,sample statistics and systems.Under the background of the acceleration of IPO examination,the appearance of registered capital and the amendment of Securities Law,the inquiry of IPO underpricing is helpful to move the capital market in right direction.The IPO of growth enterprise market company and the main participants consist of underwriters,investors and private equity investment institutions.The results in China and overseas has demonstrated that all of them are the key factors of the underpricing of the IPO of growth enterprise market company.Basis of the above theory,this paper chooses the specific growth enterprise market statistics from 2009-2016,elaborates the influence of the reputation of underwriters,investors' mood and the holdings of private equity investment institution on IPO underpricing.It draws out the conclusions finally as follows: Firstly,the good reputation of underwriters reduces remarkably IPO underpricing rate;Secondly,investors' mood affects IPO underpricing rate,namely,the positive correlation between turnover rate of new shares and IPO underpricing rate,the negative correlation between new shares winning rate in the cyberspace and IPO underpricing;Thirdly,the intervention of private equity investment institution boosts IPO underpricing incredibly with the longer share-holding time of private equity investment institution,the higher IPO underpricing rate.