The Research Of The Shorting Mechanism Influence On The IPO Under-pricing

In the stock market, under-pricing means the issuing price of IPO (initial public offering) is extremely lower than the marketing price ,or the issuing price is lower that settlement in the first day of transaction. IPO under-pricing is a world-wide phenomenon in the stock market, but it is much more serious than other countries. The margin trading was officially launched in China at March 31, 2010. It will have a great meaning for Chinese security market. The market will break up the limitation of the only way of long unilateral position,This is bound to the long-term development of China's stock market have a profound impact. Therefore,this paper comprehensively researches the effect of shorting mechanism on the IPO under-pricing?Firstly, the paper forwards the main problems of this paper, the research methods, research ideas and full-text structure arrangement. Secondly, the paper introduces relevant theory of IPO and reviews the theory of IPO under-pricing from three perspectives. This paper will review the theory from information asymmetry, related institution and investors of the irrational what cause of IPO under-pricing Thirdly, the paper introduces the related concepts of margin, short selling, and the connotation and classification analyzed three short mechanism of financial function and five kinds of negative effects. Fourthly, we set up an IPO pricing model under the mechanism of Chinese IPO by embedded in short-selling restrictions'variables, in the model,institutional investors can subscribe for IPO shares or short sell it in the trading market, we concluded that the restriction of short selling will caused greater magnitude of IPO under-pricing. Fifthly, the paper selected 43 countries related to IPO under-pricing in the sample data, including six factors as explanatory variables, IPO under-Pricing on the factors affecting multiple linear stepwise regression. Finally, draw the conclusion that shorting mechanism of significantly influences the IPO under-pricing. According to the study conclusions and realistic background, the paper pointed out that further research prospect.