State-owned Equity,Employee Shareholding And IPO Underpricing

IPO(Initial Public Offering)is the process in which a company sells shares to the public on the stock exchange for the first time in order to raises capital.Through the process,the shares of a private company can be traded publicly.Whether the IPO price is reasonable or not will determine the success or failure of the stock issue.The value of a stock is determined by its intrinsic value,which reflecting the growth potential of a company,so the stock price in the primary market should be approximately equal to the stock price in the second market.However,this is not the case.The phenomenon of "IPO underpricing" is prevalent in all countries,which means,the issue price of new shares is often lower than the closing price of the shares on the first day in the second market.Thus there is excess return between primary and second market.The IPO underpricing is common in securities markets all over the world,but the level of underpricing is different.A large number of related studies have found that the IPO underpricing in developed countries is generally lower than the underpricing in emerging countries.The IPO underpricing in Chinese market is prominent.Since Chinese A-share market was born in,the phenomenon of "IPO underpricing" has existed in the Chinese A-share market.From 1990 to 2017,the average IPO underpricing of 3554 new shares in Chinese A-share market was 157.7%.In the long run,such a high IPO underpricing is not conducive to the stable and sustainable development of China's stock market.Therefore,there are theoretical and practical significance to study the influencing factors of IPO underpricing in Chinese A-share market.This thesis uses literature review and empirical research methods to study the impact of the issue objects and ownership structure on the IPO underpricing.The related theory and empirical research results of IPO underpricing,including asymmetric information theory and behavioral finance theory.The asymmetric information theory uses the information asymmetry of each participant in the IPO process to explain the IPO underpricing.It includes Winner's curse hypothesis,the signaling effect,Agent IPO model,and book building Theory.Behavioral finance theory explains IPO underpricing from the perspective of irrational investment behavior.It includes bandwagon effect speculative bubble hypothesis and Investor sentiment hypothesis.In the empirical research part,this thesis selects Chinese A-share listed companies from 2000 to 2017 as the research sample.This thesis uses multiple-linear regression model to test the impact of the issue objects and ownership structure on the IPO underpricing.Through the research,this thesis draws the following conclusions.The IPO underpricing is positively related with the proportion of new shares issued to employees,the proportion of state owned shares before the issue,and the proportion of shares owned by employee before the issue.Finally,this dissertation put forward some recommendations related to reduce IPO underpricing rate,like government should continue to push forward the reform of state-owned enterprises,Securities Regulatory Commission and other regulatory authorities continue to improve the information disclosure system,the listing companies should improve the corporate governance structure and strengthen the information disclosure and etc.