Effects Of IPO Valuation Bubble On Corporate Financial Conservatism

The IPO valuation bubble refers to the part where the price of a stock exceeds its intrinsic value.Since the launch of the gem,China's stock market "three highs"(high IPO price,high price-to-earnings ratio and high financing overraising)have been particularly prominent,frequent occurrence of "break".IPO pricing is the core part of the whole IPO process,which is directly related to the level of financing and has a significant impact on corporate financial conservatism.The larger the IPO valuation bubble,the more capital raised,and the impact on both sides of the balance sheet,resulting in lower asset-liability ratio and increased cash holdings.If the asset-liability ratio of the enterprise is higher than the normal level or the cash holding is higher than the normal level,the company has financial conservatism.However,the research has paid more attention to the influence of corporate governance and macro factors on the financial conservatism behavior,and seldom noticed the impact of enterprise listing financing.So it is necessary to start from the IPO valuation bubble to find out the reasons for corporate financial conservatism,including capital structure and cash holdings.This paper analyzes the impact of IPO valuation bubble on corporate financial conservatism.In the sample selection,the variable value of this paper is required to be used for the three years after the listing,but from 2012 to 2014,the IPO was suspended,so the latest sample is the 876 companies listed in a-shares from 2009 to 2012.In the study design,IPO valuation bubble is the independent variable with interest-bearing asset-liability ratio,total asset-liability ratio and cash holdings as dependent variables,which used to make regression analysis.The results show that the bigger the IPO valuation bubble,the more serious the company's financial conservatism.Specifically:(1)The stock market has an IPO valuation bubble,and the order from high to low is: gem board,medium and small board,main board;(2)In the A stock market,there is a significant negative correlation between the IPO valuation bubble and the interest rate of interest and the total asset liability ratio,and a significant positive correlation with the cash holdings,which is consistent with the theoretical expectation of this article.(3)There is a significant negative correlation between the IPO valuation bubble and the total asset liability ratio of the three groups of gem,small and medium board and main board,and a significant positive correlation with cash holdings.(4)There is a significant negative correlation between the IPO valuation bubble and the interest rate of interest in the two groups of gem and main board.The negative correlation between the IPO valuation bubble and the interest rate of interest rate assets is not significant.Therefore,in order to effectively control the financial conservative behavior of the enterprise,we should proceed with the control of the IPO valuation bubble and continue to optimize the IPO new issue system,and require the listed companies to improve the efficiency of the use of funds.The main innovations of this paper are two aspects:(1)From the perspective of financing,this paper studies the influencing factors of financial conservatism,and analyzes the two aspects of cash holdings and capital structure,not only the latter.(2)In this paper,the residual income model is used to calculate the intrinsic value and to compare the valuation bubble with the distribution price,which is more scientific and accurate than the commonly used P/E model in the past.