The Investor Emotion Suppresses The Impact Search Of Price On The Medium And Small Enterprises Board IPO

A systematic increase from the offer price to the first-day closing price has been documented for initial public offerings,this phenomenon is usually called IPO underpricing.A great deal of studies found, the phenomenon of IPOunder-pricing exists in almost every stock market , emerging markets'are higher than developed markets'. IPO underpricing is one of ten mysteries of Modern Finance, in recent decades ,this phenomenon is widely noticed by scholars. A number of hypotheses made by them to explain this phenomenon,but no one can win wide support.Existent researching files point to the IPO underpricing in Chinese stock market is the highest level. Many Scholars made a lot of researches on this phenomenon by asymmetric information theory and Chinese market system, as yet,the problem has not been resolved,and most of the scholars study market as a whole, few systematic researches on small and medium enterprise board have been carried out so far. As the development of Behavior Finance, empirical economic research enriched with inputs from psychology reveals that investor sentiment are important factors of IPO underpricing.Based on the theory of behavior finance,this paper tends to explain IPO underpricing of small and medium enterprise board from investor sentiment standpoint.With the IPO dataset covering the period 2006-2007 and containing all initial listings of A stock on the Stock Exchange in China,this paper has important findings on the following two aspects: First, when we examine the effect of investor sentiment on IPO underpricing,we constructed a measure system for investor sentiment which includes four variables,we use a very large dataset, we compare the effects from investor sentiment with those from asymmetrically distributed information and institutional background of Chinese security marker,and we find that the investor sentiment has a more significant impact on IPO underpricing; Second,the Consumer Confidence Index has a positive correlation with IPO underpricing of small and medium enterprise board and is the most influence factor. The turnover rate on the first day is still one of the key factors. Finally, in order to guarantee the rapid and healthy small and medium enterprise board growth, this paper also makes some suggestions.