Registration System,Underwriters And IPO Underpricing

At present,the registration system has widely become a kind of issuance system adopted by the developed capital market.The crux of the registration system is to stress on earlier information disclosure in order to diminish the amount of information asymmetry in the principal finance market with the help of a fitting disclosure system.The CSRC,the Exchange and other relevant regulatory authorities will no longer make substantive value judgments on enterprises preparing for IPO listing,but only complete formal review,that is,only review the authenticity and accuracy of a series of application materials.The real intrinsic value of IPO enterprises will be determined by the market to a greater extent.At the same time,under the registration system of issuance,the "threshold" for enterprises to go public is relatively lower than the previous approval system and approval system,which greatly shortens the time for IPO enterprises to queue for review,and ultimately makes the issuance process simpler and more transparent.The financial market’s resource allocation function is of immense importance for promoting the strong growth of the real economy.On June 13,2019,the Shanghai Stock Exchange first became a pilot field for the registration system and set up a scientific innovation board,which also marked that China’s capital market began to gradually close to the mature capital market and took an important step.However,up to now,the time for the implementation of the registration system in China is still relatively short compared with some developed capital markets abroad.Whether the registration system can effectively improve the pricing efficiency of China’s IPO and promote market effectiveness,and whether there is "acclimatization",has not yet reached a consensus in China’s academic circles..This study utilizes companies that conducted Initial Public Offering(IPO)on the A-Share market between January 1,2017 and July 22,2021 as its research sample to analyze the effect of the registration system overhaul on IPO underpricing..Empirical research ultimately finds that,in terms of the shortterm IPOs,the reform of the registration system can result in a decrease of the underpricing of newly issued shares;the yield of these shares on the first day thus is significantly greater than their respective P/B ratios.Additionally,the proficiency of the underwriters is also influential in diminishing the IPO underpricing.The registration system’s ability to reduce IPO underpricing is based on the proficiency of its underwriters;moreover,it can also reduce the adverse correlation between the initial public offering’s long-term performance and such underpricing in the capital markets.Finally,through empirical research,it is found that from the perspective of short-term new share issuance,the registration system reform can reduce the degree of IPO underpricing of newly issued shares to a certain extent.It is evident that the implementation of a registration system could be an effective measure to elevate the capital market’s pricing efficiency,though regulators have further options to optimize their part in the process.business entities,underwriters and various market participants in the capital market.