An Empirical Analysis:the Impact Of Risk Disclosure On IPO Underpricing

IPO underpricing is an interesting phenomena,which the issue price of shares is significantly lower than the first day closing price.At present,there is a large number of excess returns on the first day of stock market.A lot of research has been carried out on this phenomenon both in domestic and abroad.The theoretical analysis has become mature which based on the theory of information asymmetry and the theory of investor sentiment,but the research on Risk Disclosure in the prospectus started.The prospectus,as a kind of text that the regulatory agency requires the listed companies to disclose in the first public issue,can be directly provided to the investors in the distribution market as an investment basis to reduce the information asymmetry.Although risk disclosure is mandatory disclosure,it is in essence selective disclosure,which is the result of multi game in the distribution market.Then how the high quality disclosure influence on IPO underpricing requires to be studied.This article selects 2014-2016 years' initial public company as the research object,and collects 478 samples.The HH text analysis method is used to deal with the disclosure of risk factors in the prospectus,and the standard risk factors and informative risk factors are obtained,which represent repeated&low quality risk and proprietary&high quality risk.Then we take the standard risk factors and the specific risk factors as explanatory variables with control variables which contain the characteristics of the issuing enterprises,the characteristics of the domestic issuance control,the market heat variables and the Underwriters,and then establish the OLS model for empirical research.Through the model established,this paper studies the different effects of risk disclosure quality on IPO underpricing,and compares the similarities and differences between the risk disclosure of Listed Companies in different sectors and the influence of IPO underpricing.Empirical research shows that low quality risk disclosure will lead to an increase in IPO underpricing.In the case of high market sentiment,we find that the specific risk factors in the prospectus will be overhyped by the market and raise the IPO underpricing rate.In addition,in the mainboard of Shanghai and small and medium-sized and GEM,standard risk factors and specific risk factors affect the way of IPO underpricing.The empirical results provide new ideas for policy-making and policy measurement.