Research On The Rationgality Of IPO Pricing And The Causes Of High Return On Star Market

The STAR Market carries the mission of improving the system structure of China’s capital market and promoting high-quality economic development.The newly established STAR Market has carried out a series of reforms in its operating system,such as pilot registration system,relaxing listing conditions and implementing more marketoriented pricing methods and trading mechanism.However,since the opening of the STAR Market,IPO pricing and IPO return have repeatedly reached new highs,which has attracted great attention from all walks of life.This paper makes an in-depth study on the rationality of IPO pricing and the causes of high return of STAR Market,and analyzes whether the high return of IPO is caused by unreasonable IPO pricing.The research conclusion has important theoretical significance and practical value for verifying the effect of registration system reform of STAR Market and improving relevant policies of capital market.Taking the companies listed on the STAR Market from June 2019 to March2021 as the research object,this paper studies the rationality of IPO pricing and the causes of high IPO return.Firstly,it systematically combs the relevant literature of IPO pricing and defines the core concepts of this paper,and then introduces the general situation of China’s STAR Market,issuance mechanism and relevant theories,so as to lay a theoretical foundation for the subsequent empirical analysis.Finally,an empirical study is carried out on the causes of IPO pricing and high return of STAR Market: first,the rationality of IPO pricing of STAR Market is verified by using stochastic frontier model(SFA),that is,judge whether the IPO pricing of STAR Market is overestimated or underestimated relative to the internal value of the company,and analyze the factors affecting IPO pricing;Second,based on the conclusion that IPO pricing is not underestimated,multiple regression models are used to explore the factors leading to bubble and IPO high returns in the two tier market after the listing of the company.Through theoretical analysis and empirical research,we get the following conclusions:(1)The IPO pricing of STAR Market does not reflect the intrinsic value of the company,but there is a certain bubble.This is different from the market and some scholars believe that the high return of IPO is caused by the undervaluation of IPO.(2)The proportion of R &D investment,issuance rate,issuance scale,return on net assets,underwriter reputation and other factors of STAR Market company lead to the overestimation of IPO pricing of STAR Market by 73%;(3)The reason for the high return of IPO does not lie in the underpricing of the primary market,but in the premium caused by the irrationality of the secondary market.The specific influencing factors include the proportion of strategic placement,issuance rate,science and innovation attributes,etc.According to the conclusions of this paper,this paper makes a summary and analysis,and puts forward suggestions from the following aspects:(1)securities intermediaries should improve their pricing ability and self-discipline level,and do a good job as the "gatekeeper" of the IPO of STAR Market.(2)We will develop and regulate institutional investors,and strengthen the protection and investor education of small and medium-sized investors.(3)Regulators should improve the supervision of pricing and audit links.