Empirical Study On IPO Underpricing Based On Asymmetric Information Theory

In 1990,the Shanghai stock exchange and Shenzhen stock exchange have opened,marking Chinese stock market officially kicked off.In a short span of 20 years of development,the IPO system has changed from Audit system which with strong administrative instruction,to the Approval system which combined administration with market,now the registration system.The IPO system has been marketization step by step.During this process,the rate of return on the first day of new shares,that is,IPO underpricing rate has always been high,which aroused the concern of many scholars.In the end of 2015,IPO restarted with the Registration system start in March 1,2016.2016 is the first year of the transition period of the Registration system.Under this background,this paper selects the new stocks in main board stock market from August,2001 to December,2016 as the research sample,establish models based on asymmetric information theory and divided total sample interval into four stages based on IPO system.Then we carry out series multiple regression analysis in four phase,explore the relationship between asymmetric information theory and IPO underpricing in different IPO system.The results show that the asymmetric information theory has caused the IPO underpricing,the reputation of underwriter,the new policy,the market condition may also effect the rate of return of new shares,and the implementation of Registration system can reduce the information asymmetry between issuers,underwrites and investors,thereby reducing the rate of IPO underpricing.Therefore,based on the conclusions,this paper puts forward some suggestions respectively from investors,underwriters,issuers and the government for the system of new shares,to reduce the asymmetry of information in IPO market,to promote a more stable and effective registration system.