Research On The Reasons And Economic Consequences Of STAR Market Companies’ IPO Breaks

The IPO break refers to the phenomenon that the IPO company’s stock price is lower than the primary market issue price.For a long time,the phenomenon of the high rate of IPO underpricing on the first day of IPO is widespread in the initial public offering issues in China.Even in the early stage of the registration system of the STAR market and the implementation of the market-oriented IPO inquiry mechanism,the high rate of IPO underpricing on the first day of IPO has not been alleviated,and the company rarely breaks on the first day of IPO.In order to further improve the efficiency of IPO pricing,Shanghai Stock Exchange and China Securities Regulatory Commission revised “The Implementation Measures for the Issuance and Underwriting of Shanghai Stock Exchange’s STAR market” on September 18,2022,reformed the registration system of IPO inquiry mechanism.However,after the reform of the IPO inquiry mechanism on STAR market,the IPO price suppression efficiency of the STAR market has been reduced,but there have been frequent IPO breaks of new shares and new highs in the market.The IPO break of IPO companies on the STAR market not only seriously damages the economic interests of market investors,but also affects the refinancing of IPO companies after listing,or may cause abnormal fluctuations and market pessimism in the securities market.Therefore,it is of great significance to study the reasons and the economic consequences of the IPO break appearing in STAR market after the implementation of the new IPO inquiry mechanism.As the case study object,this thesis analyzes the causes and economic consequences of the IPO break by using the combination of the literature study method and the case study method.First of all,on the basis of summarizing the existing literature,this thesis specifically expounds the concept and type of IPO break,the concept of IPO inquiry mechanism,the characteristics of the IPO inquiry mechanism of STAR market,the main factors affecting the IPO pricing efficiency and the valuation method of the intrinsic value of IPO companies.Subsequently,this thesis briefly introduces the basic situation and the listing process of ASR Microelectronics Company,estimates the intrinsic value of ASR Microelectronics Company by using the price-to-book ratio method,and introduces the characteristics of the first day of listing and the subsequent continuous decline of the stock price.After that,this article makes an in-depth analysis of the reasons for the first day of trading and the reasons for the continuous decline of the stock price after the listing,and analyzes the economic consequences of the IPO break from many aspects.Through the analysis,we find that STAR market company valuation difficulties,issuer exaggerated propaganda research and development ability,underwriters for opportunistic motives deliberately overestimate the company value and offline institutional investors in STAR market under the background of the implementation of the new IPO inquiry mechanism for the shortlisted for the high lead technology IPO pricing is far too high,causing the express technology of new shares that broke.In addition,the IPO price was much higher than its intrinsic value,the progress of the company’s core R&D projects and the company’s lower operating profit than expected,and investor sentiment in the downturn in the stock market.The IPO suffered caused direct economic losses for investors,huge losses from underwriters and underwriting,and the company’s refinancing after the IPO.Based on the case-specific analysis,this thesis draws the following conclusions: first,the IPO price is much higher than its intrinsic value which is the main reason for the IPO break of the issuing company;second,the failure to complete the R&D project on time is an important reason for the continuous decline of the stock price after the IPO;third,the decline of the stock market aggravates the decline of the stock price after the IPO;fourth,IPO break will harm the interests of stakeholders.Based on this,this thesis draws the following enlightenment: first,to further curb the “money circle” behavior of IPO companies;second,to further guide the institutional investors to quotation reasonably;third,the underwriters should earnestly fulfill the responsibility of sponsoring and underwriting;fourth,the investors involved in the “speculation” should establish the concept of rational investment.The main contributions of this study are mainly reflected in the following aspects:(1)The current literature on the impact of investor behavior,underwriter behavior and institutional investor behavior factors on IPO pricing efficiency is mainly based on the conclusions of foreign mature securities market or the IPO system in China’s main board market.Therefore,based on the background of the implementation of the registration system on STAR market and the revision of the IPO inquiry mechanism,this thesis studies the influence of the behaviors of IPO pricing participants on the IPO pricing efficiency,which is helpful to enrich the relevant research on the influencing factors of IPO pricing efficiency in China.(2)As the IPO pricing rate of Chinese IPO market is much higher than that of the mature foreign markets,there is a long-term IPO underpricing phenomenon.Domestic IPO pricing problem usually focuses on the high IPO price suppression,and there is little research on the phenomenon of IPO breaking.Therefore,this thesis studies the reasons and economic consequences of the IPO break on STAR market,which can enrich the incremental literature on the IPO break in emerging capital markets.(3)At present,most of the studies on the IPO pricing efficiency of STAR market are mainly based on empirical research,and mainly focus on the phenomenon of high IPO underpricing.So,there is a lack of case studies on the IPO break appearing in STAR market.Therefore,in this thesis,with the typical case of ASR Microelectronics’ s IPO break,this thesis analyzes the underlying reasons and impact of the IPO break in STAR market,and enriches the relevant research on the IPO pricing efficiency of STAR market from the perspective of case study.