Analysis Of The IPO's Impact On Stock Price Volatility

IPO is an important function of the stock market.The enterprise can raise much-needed funds for development through the IPO and investors can buy shocks of firms that have high growth through the IPO.New shares not only increased the investment opportunities in stock market and expanded the size of the stock market,but also attracted more investors to enter the stock market investment that has added a new vitality to the stock market.It can be said that IPO is one of the most frequent activity of stock market.If the stock market can't achieve this normal function,the necessity of the existence of that will be doubtful.But throughout the history of the development of stock market in China,there have been no less than eight times the IPO suspensions,and the reasons of that are manifold.The history of stock market in China is not long,there are still many problems.Such as the issuing and trading system is still not perfect,there is a long-term problem of high IPO underpricing rate in the primary market.The structure of the secondry stock market in China dominated by retail investors is not effective in playing the pricing function,etc..This a series of problems led regulators to suspended IPO from time to time.Another thing to mention is that the"fear of the new" phenomenon has been in existence since the establishment of the stock market in China.The IPO had made the investors very nervious every time.About the subject that IPO will or not affect the volatility of the prices of stock,domestic scholars have launched a number of studies.Through the study,they generally found that IPO is not the main reason for the long-term volatility of our stock market,but it will have a short-term impact on the marke.Because the way of issuing new shares in China once is the sale by proportion and full payment,coupled with the phenomenon of high IPO underpricing rate,every times IPO will freeze a lot of funds.A part of funds comes from the the sell-off of stocks in secondary market,the impact on the market is worth of serious study.The securities regulatory authorities seem to have found the influence of this,followed by the introduction of the new payment system to alleviate the short-term effects of IPO on the secondary market.Whether the new payment system can play a big effect,it's worth for our study.This article will use the Event Study Method to analyze the changes of stock index in the period of the issuing of new shares from the aspect of capital flows between the primary market and the secondary market caused by IPO.This article will analyze the impact caused by the issuing of new shares before and after the reform of issuing system and contrast them,then evaluate the effect of this policy.