The Impact Of The Reform Of Initial Public Offering System On The IPO Underpricing

IPO is an important way of raising money for Chinese companies.This is undoubtedly an important link in China's capital market which links the entities to the capital market.On the one hand,the IPO companies can bring fresh blood to the secondary trading market of stocks and attract more funds for admission.On the other hand,it brings liquidity to the equity of the original shareholders of the company,as external investors can also participate in business decisions by holding enough equity.However,domestic and foreign scholars have found that the closing price of the IPO companey is generally higher than the issue price on the first day of IPO listing.Ibbostson called this phenomenon the mystery of IPO underpricing.The underpricing phenomenon is more serious in the emerging capital markets,and China's IPO underpricing rate is even higher.China's securities market has been developing for only 20 years,and the corresponding legal system and supervision system need to be further improved to better combat chaos and to promote the healthy development of the securities market.In order to better curb the speculation of new shares,on November 30,2013,the China Securities Regulatory Commission issued the “Opinions on Further Promoting the Reform of the New Share Issuance System” and implemented it after the IPO was restarted in early 2014.The purpose of this reform is to reduce the high price of IPO on the first day,to curb speculation,and to protect small and medium investors by strengthening the supervision of information disclosure.The "Opinions" specifically proposed the first-day quota limit system on the first day of listing to limit the transactions on the first day of listing.This article is aimed at the publication of the No.42 document in 2013 to discuss how the new share issuance system reform has had an impact on the IPO underpricing in our country and what the effectiveness of the policy reform is.The research content of this paper is mainly divided into three parts.First,we review the domestic and foreign research literature of IPO underpricing factors,and systematically summarize the factors that influence IPO underpricing.The second part of this article first analyzes the relevant theories involved in No.42 [2013],and redefines the “underpricing rate” and “turnover rate” under the new system.At the same time,a statistical analysis method was used to process and compare the IPO company's listing data before and after the implementation of the system,and preliminary conclusions were drawn on the effectiveness of the policy.In the third part of this paper,the second part of the statistical analysis of the conclusions of the second case analysis,respectively selected the same industry,two GEM listed companies,before the implementation of the system-State Technology,and after the implementation of the system-Creative Information to verify the conclusion of the second part.Through the research,it was found that No.42 [2013] did improve the pricing efficiency of the primary market to a certain extent,but in the secondary market,it only delayed the rise in the price of new shares,thus in the following days,the stock price of new shares rose continuously.It is believed that the pressure to suppress the rise of stocks continues to erupt,and the final underpricing rate is much higher than the pre-institution pre-emption rate.