Institutional Evolution,Participators’ Behaviors And Chinese Market-oriented IPO Bookbuilding

IPO bookbuilding has been introduced in China since 2005 and China Securities Regulatory Commission(CSRC)has reformed the system several times over the last ten plus years.The reforms had undergone several rounds,focusing on the IPO offline inquiring,pricing and allocation mechanism.There are lots of theoretical and empirical studies in this field,but most of them often focus on a special episode/problem and neglect the underlying logical and dynamic institutional arrangements.Besides,there are several key participators in Chinese-styled IPO bookbuilding games,such as issuers,underwriters,offline and online investors.What are their core interests?How these interests come into effect via participators’incentives and interactive behaviors?What are their behaviors’ main characteristics and the underlying forces?And what do the Chinese-styled IPO bookbuilding’s equilibrium outcomes mean to the market’s pricing efficiency?Many of such questions remain to be answered,which demand a unified framework,multi-dimensional point-of-view and scientific research design.The thesis aims at providing objective and comprehensive research results to answer some of the above-mentioned questions and enhance our understandings of Chinese-styled IPO bookbuilding.Based on New-Institutional-Economist Williamson’s EIGR institutional research framework(Williamson,2000).the thesis embeds IPO participators’ behaviors in the institutional evolution of Chinese-styled IPO bookbuilding.From the dual perspectives of institutional constrains and participators’ opportunism,the thesis goes on analyzing Chinese IPO bookbuilding with detailed institutional background combing,literature review,several empirical studies and one agent-based simulation model.Several important findings and conclusions are as follows:Firstly,Chinese-styled IPO bookbuilding’ evolution has demonstrated four styled facts:top-down institutional supply,adaptive institutional evolution,complex social systems engineering and implicit institutional arrangement.Secondly,during Chinese market-oriented IPO bookbuilding stage,Chinese IPO underwriters with allocation discretion had utilized it to allocate more IPO stocks to their stakeholders-a case corresponding to agency problem in IPO allocation.But due to some constraints imposed by Chinese IPO bookbuilding regulation and the predetermined and disclosed allocation rules,underwriters catered for their stakeholders’ interests by letting their bids be effective(via their discretion in setting the excluding high prices and IPO prices),but not by enhanced allocation proportion.Lastly,during Chinese IPO registration system stage,there emerged a somewhat puzzling behavior-bidding-in-herd-among offline institutional investors.We studied this phenomenon empirically and w ith agent-based modelling.Both studies showed that bidding-in-herd was affected by two main underlying factors:bookbuilding regulatory constraints and offline investors’ adaptive opportunistic behavior.The thesis’s marginal contributions and innovations are mainly manifested in the following aspects:1.The thesis is based on New-Institutional-Economist Williamson’s EIGR institutional research framework(Williamson,2000)and takes the dual perspectives of institutional constraints and participators’opportunism in studying participators’behaviors in Chinese-styled market-oriented IPO bookbuilding.The thesis exams Chinese IPO bookbuilding’s institutions and the typical behaviors of IPO participators systematically and longitudinally,which enriches current IPO studies,helps us understand Chinese-styled IPO bookbuilding mechanisms better,and provides sound policy implications.2.In addition to the empirical study on underwriters’ allocation behavior in Chinese market-oriented IPO bookbuildings,the thesis carries out systematic and strict research on offline investors’ bidding-in-herd behavior during Chinese IPO registration system stage for the first time.Why offline investors have bidden in herd is a puzzle to some extent and our research is an initial scientific attempt,providing us some results with significant policy implications.3.Methodologically,the thesis utilizes the rich collected bidding/allocation data and an agent-based model(ABM),so as to understand the emerging complicated IPO participators’ behavior better.As far as I know,the ABM is constructed and applied for the first time in the IPO research,which has shown its potential in understanding IPO offline investors’ biddin g-in-herd behavior in China.I look forward to utilizing ABM and seeing more applications of ABM in relevant fields in the near future.4.Largely due to the above-mentioned marginal-innovative approaches I have taken,the thesis arrives at some novice results,significant conclusions,and hence valuable policy implications.5.There are also some too-easy-to-be-overlook but fundamental "getting-yourhands-dirty" work during doing the research.I have collected,read and combed the seemly-endless regulatory and policy documents in Chinese IPO bookbuilding and made it a separate lengthy chapter with lots of footnotes in the thesis.It serves as the institutional background and the basis for our empirical studies and agent-based modelling.The work also deepens our understanding of the underlying logic of "where Chinese-styled IPO bookbuilding has come from and where it will go into".Moreover,I have devoted much effort in collecting,checking,cleaning and tidying the massive IPO bidding and allocation data.