R&D Investment,Underwriter's Reputation And IPO Underpricing

With the rapid development of the economic era and the advancement of market-oriented reform of China's new stock issuance,Initial public offerings has become one of the financing channels that more and more companies tend to choose.However,compared with western developed countries,the information asymmetry in China's securities market is more obvious,making the IPO underpricing rate high,and its influencing factors can be considered from the perspective of different market participants.From the perspective of the issuer,high-tech issuers need to continue to invest in research and development.Although their R&D investment share form the basis of competitiveness of high-tech enterprises,its characteristic,including high risk,long-term,value uncertainty and incomplete disclosure,has become one of the root causes of deepening the information asymmetry among the various parties in the securities market,which further affects the phenomenon of IPO underpricing.From the perspective of intermediaries,underwriters,as the main intermediaries in the securities market,are responsible for conducting due diligence on issuers and passing the results of the investigation to investors by issuing relevant documents,thus playing a role in regulating the asymmetry of information between issuers and investors in the securities market.The reputation of the underwriter is a comprehensive market evaluation of the underwriter's previous underwriting ability.Underwriters with a higher reputation can be more trusted and recognized by the market and investors,and will be more recognized by issuers,especially high-quality issuers,thus becoming a key link in regulating the information asymmetry of the parties in the securities market.Ultimately,the reputation of the underwriter has become a factor that affects the phenomenon of IPO underpricing and adjusts the relationship between R&D investment and IPO underpricing.Based on information asymmetry theory,underwriters' reputation theory,and market feedback theory,this article firstly sorts and summarizes the existing relevant literature on R&D investment and underwriters' reputation to explain IPO underpricing.It then respectively analyzes the impact of R&D investment and underwriters'reputation on IPO underpricing,and the role of underwriter reputation in regulating R&D investment and IPO underpricing,based on which hypotheses were then proposed.variables are designed and models are built.Then,577 A-share high-tech companies that disclosed R&D investment information and listed between 2010 and 2018 were used as samples to verify the hypothesis and analyze the regression results.Next,a series of investigations were made on the lagging effect of R&D investment,the impact of the IPO shutdown,whether it was a GEM listing,and the impact of total underwriting costs to form a further analysis.Finally,conclusions are drew based on the above analysis and verification results.The main conclusions of this paper are as follows:First,the R&D investment of the company to be listed has a positive effect on IPO underpricing.Second,the reputation of the underwriter selected by the company to be listed has a negative impact on IPO underpricing.Third,the underwriter's reputation negatively regulates the level of IPO underpricing caused by R&D investment.Fourth,suspending the IPO to strictly rectify the securities market will help promote the efficient operation of the securities market.Fifth,the GEM and the underwriters serving the GEM have a higher tolerance for high-tech enterprises and the greater ability to identify risks.Sixth,the total underwriting fee is not only a catalyst for the reputation of underwriters to play a role,but also a cost to identify the efficiency of R&D investment and IPO reasonable pricing of listed companies.Finally,based on six conclusions,this article gives policy recommendations from six aspects:improvement of the information disclosure system of the company to be listed,improvement of the underwriter's professional ability,investor education,securities market supervision,clear positioning of the listing sector and formulation of underwriting expenses.Then analysis of limitations and prospects are carried out.