| As an important intermediary in the primary capital market,underwriters are responsible for determining the IPO price by collecting information about the intrinsic value of the IPO company.The IPO pricing efficiency is not only directly related to the underwriters’ IPO income,reputation ranking and future underwriting market share,but also directly related to the IPO company’s success in listing,the cost of equity capital,the investment return of its original shareholders and the investment decisions and economic returns of the investors.Therefore,the research on the IPO pricing efficiency of the underwriters is of great significance and value to the healthy and orderly operation of the whole capital market and the effective allocation of resources in the real economy.From the perspective of information collection in the IPO capital market of the United States,this paper focuses on the impact of the information collection before the roadshow on the IPO pricing efficiency.There are three main reasons for choosing IPO companies in the U.S.capital market as the research object: First of all,before the reform of inquiry system in2005,IPO pricing in China has been accompanied by strong administrative intervention and the degree of marketization is low.Secondly,after the reform of IPO inquiry system,the IPO underwriters in China have no right to choose the inquiry objects freely,nor do they have completely independent IPO pricing rights and rights of allotment.Compared with the IPO value discovery function of underwriters,whether institutional investors can fulfill their duties and quote prudently is more important to IPO pricing efficiency.Finally,under the current Inquiry Issuance System,although the IPO lead underwriter needs to set the IPO price range in the investment value research report provided to the inquiry object,the report is not publicly disclosed,and the quotation of the inquiry object is not limited by the IPO price range set by the underwriter.In contrast,the IPO underwriters under Bookkeeping System in the U.S.have completely independent IPO pricing rights,rights of allotment and the right to select the inquiry objects;the IPO issuance price range set by the underwriter is disclosed to the public through S-1 or S-1A documents,and the quotation of institutional investors must fluctuate within the IPO price range.To sum up,choosing the IPO companies listed in the U.S.capital market as the main research object on the one hand can effectively study the role of underwriters in the value discovery of IPO companies;on the other hand,it helps to better understand the mechanism of underwriters’ IPO pricing in mature capital market,so as to further improve China’s Inquiry Issuance System and give full play to the role of underwriters in the IPO company value discovery in China’s capital market.The IPO pricing information collection of underwriters in the U.S.capital market mainly includes two stages: due diligence and roadshow inquiry.The main reasons for studying the information collection in the due diligence stage are as follows: first,previous studies on IPO pricing efficiency mainly focused on explaining the phenomenon of "IPO Underpricing Puzzle",and paid less attention to the validity of IPO price range.Secondly,the existing literature on the IPO pricing efficiency focuses on the information collection in the roadshow or the information quality in the IPO prospectus,and the research related to the information collection before the roadshow is relatively scarce.Thirdly,according to the "silent period" in the Securities Act of 1933,the IPO underwriters are not allowed to consult a third party about the offering before the roadshow.Therefore,starting from the information collection before the roadshow not only can do research on the information collection activities in this period,but also can further study the relationship between the information collected by underwriters on their own and the information collected from institutional investors,so as to deepen the understanding of the internal mechanism of underwriters’ IPO pricing.For the above reasons,based on the principal-agent theory,corporate governance theory,information asymmetry theory,stock price information content theory and information cost theory,taking IPO companies listed in the U.S.capital market from 1995 to 2018,this paper examines the influence of information collection on underwriters’ IPO pricing efficiency from three dimensions,namely information quality,information quantity and information collection and analysis ability of underwriters.On the basis of comparing the main similarities and differences between China’s current Inquiry Issuance System and the Bookkeeping System in the U.S.,this paper expounds the significance of the IPO pricing efficiency of underwriters in the U.S.capital market for reference and enlightenment to China.The main findings are summarized as follows:First of all,chapter 4 studies the impact of the information content of share price on the IPO pricing efficiency,that is,the relationship between the quality of stock price information and the IPO pricing efficiency.The results show that the higher the information content of the share price of companies in the same industry as the IPO firm before the roadshow,the smaller the initial IPO price range and the closer the initial IPO price is to the intrinsic value of the IPO company,which shows that the underwriters can excavate more useful IPO pricing information from the high-quality stock price information,reducing the uncertainty of the intrinsic value of the IPO company.In addition,the study found that the higher the information content of the share price of IPO companies in the same industry before the roadshow,the smaller the adjustment of initial IPO pricing,and the lower the IPO underpricing.This shows that when the underwriters can collect higher quality useful information for IPO pricing from the external capital market before the roadshow,the underwriters needs less private information from institutional investors.Further research shows that when the proportion of intangible assets to total assets of the IPO companies is high,the impact of the information content of share price of companies in IPO firm’s same industry on the IPO pricing efficiency is reduced,which shows that as an indirect information,the IPO value relevance of the information content of the share price is low,so when the uncertainty of the intrinsic value of IPO companies is high,underwriters will reduce to rely on such indirect information and instead turn to collect direct information through due diligence and roadshows.Finally,after grouping the sample companies according to the level of corporate governance,the results show that when the independent directors in the board of directors of IPO companies are relatively high,the underwriters will rely more on the direct information collected within the IPO company in their IPO pricing decisions,that is,when the quality of corporate governance is high,the impact of the information content of the share price on the pricing efficiency of underwriters is reduced.Secondly,chapter 5 focuses on the impact of "soft information" within IPO companies on the IPO pricing efficiency,that is,the relationship between the quantity of "soft information" that underwriters can collect from IPO companies and IPO pricing efficiency.The results show that the closer the underwriter is to the IPO company,the smaller the initial IPO pricing range is and the closer the initial IPO price is to the intrinsic value of the IPO company,which indicates that the underwriters who are closer to the IPO company geographically can collect more “soft information” related to the intrinsic value of the IPO company at a lower cost,thus effectively reducing the uncertainty of the underwriters about the intrinsic value of the IPO company.In addition,the closer the geographical distance,the smaller the adjustment of the initial IPO price after the roadshow is,and the lower the IPO underpricing is.This shows that when the underwriter can collect more “soft information”before the roadshow,it will correspondingly reduce the demand for private information from institutional investors during the roadshow.Further research shows that when the information content of the stock price of companies in the same industry as the IPO firm is high,the geographic distance has a lower impact on the underwriters’ IPO pricing efficiency,which shows that when underwriters can get high-quality IPO pricing information from the stock price at a lower cost,the underwriters’ demand for “soft information” from the IPO company decreases.In addition,the study also found that when the proportion of intangible assets in total assets of the IPO company is high,the geographic distance has a stronger impact on the underwriters’ IPO pricing efficiency,which shows that when the information asymmetry of the IPO company is high,the underwriters need to spend more time and energy to collect“soft information” to determine the intrinsic value of the IPO company.Thirdly,considering that the IPO pricing efficiency of underwriters depends not only on the quality and quantity of information that underwriters can collect,but also on the ability of underwriters to collect and analyze information.,chapter 6 further studies the impact of different underwriting models on the IPO pricing efficiency.The results show that compared with the single underwriter,the initial IPO price range set by the joint underwriter is smaller,and the initial IPO price is closer to the intrinsic value of the IPO company,which shows that the joint underwriter has stronger information collection and analysis ability than the single underwriter in the process of due diligence,thus effectively reducing the uncertainty of the intrinsic value of the IPO company.In addition,compared with the single underwriter,the joint underwriters adjust the initial IPO price more after the roadshow,and the IPO underpricing is also lower,which shows that the joint underwriters have stronger ability to collect private information from institutional investors through the roadshow,and could more credibly transmit the collected information to investors in the capital market,thus effectively reducing the degree of information asymmetry between investors and IPO companies.Further research finds that when the proportion of intangible assets of IPO company in total assets is high,the influence of joint underwriters on IPO pricing efficiency is enhanced,that is,when the uncertainty of the intrinsic value of IPO company is high,the information collection and analysis ability of joint underwriters is more important.On the basis of the study above,this paper further classifies the joint underwriters according to their different backgrounds.The results show that compared with “non relational joint underwriters”,the price range set by "relational joint underwriters" is smaller,and the initial as well as the final IPO prices are closer to the intrinsic value of the company,which indicates that the "relational joint underwriter" has significant advantages in information collection,analysis and dissemination.Finally,the paper studies the enlightenment to China of the IPO pricing efficiency of underwriters in the U.S.capital market.The results show that although there are some similarities in the overall pricing process between Inquiry System and the Bookkeeping System,the roles of IPO underwriters in IPO pricing are quite different.With the accelerated opening of China’s financial capital market,the IPO underwriters in China will compete with the first-class underwriters in the world.The full implementation of IPO Registration System puts forward higher requirements on the business organization ability,pricing research ability and sales cooperation ability of underwriters in China.Based on the above findings and conclusions,the Bookkeeping Pricing method is worth learning from in the following two aspects: first,the requirement for the lead underwriter to write investment value research report should be cancelled,and the IPO prospectus should be the primary reference document for investors to determine the intrinsic value of IPO companies;Secondly,the positive role of on-site roadshows in reducing the information asymmetry between IPO companies and external investors should be stressed.The findings of the empirical study have the following two implications for improving the IPO pricing efficiency of underwriters in China’s capital market: first,by giving the underwriters full independent IPO pricing power and allotment right can help the underwriters better collect information and act as value certification in the IPO process;secondly,encouraging underwriters to actively broaden their own IPO pricing information collection channels and make full use of the the stock price information to improves the rationality of IPO price.The academic contribution of this paper is mainly reflected in the following aspects:(1)the existing research on the economic consequences of stock price information content fails to fully study the direct impact of stock price information content on the real economy.Taking IPO companies as samples,this paper focuses on how the stock price information content directly affects the effective allocation of capital in the real economy by influencing the IPO pricing decisions of underwriters,thus it provides a new perspective to explore the economic consequences of stock price information content.(2)At present,the research on IPO pricing information collection of underwriters rarely discusses the relationship between the useful "soft information" of IPO company internal pricing and the IPO pricing efficiency of underwriters.By using the geographic distance between underwriters and IPO companies as the proxy of underwriter’s "soft information" collection cost,this paper systematically studies the impact of effective collection of such information on underwriters’ IPO pricing efficiency,thus further enriching the research results in the field of economic value of "soft information".(3)The existing research on the role of different underwriting models in IPO mainly focuses on the impact of risk sharing and value certification of joint underwriting model on IPO underpricing.This paper focuses on the relationship between the information collection and analysis ability of joint underwriters and IPO price range,price adjustment after roadshow and IPO underpricing,so as to further expand the research results of joint underwriting model.(4)In the course of the reform of IPO pricing system in China,how to give full play to IPO underwriters in the value discovery of new shares has always been the core issue of regulators.Through the combination of empirical analysis and theoretical research,this paper discusses the significance of IPO pricing efficiency of underwriters under Bookkeeping System for reference and enlightenment to China,so as to further improve China’s IPO Inquiry Issuance System and improve the rationality of underwriters’ IPO pricing in China’s capital market. |
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