The Research On IPO Under-pricing Of China's Growth Enterprise Board Market

On October 30, 2009, the opening of Growth Enterprise Board Market not only broadsthe financing channels for technology-based Small and Medium-sized Enterprises, promotesthe development of technology-based SMEs, but also helps to improve our country multi-layer capital market structure. However, due to its initial development, the ability of pricingis low, there are many problems about the new stock price, especially more serious problemof IPO under-pricing. In order to adequately take advantage of the Growth Enterprise BoardMarket, it is necessary to research IPO under-pricing on the Growth Enterprise Board Market.This paper studies the GEM IPO under-pricing in an all-round way adopting the theoreticalanalysis combined with the empirical studies on the basis of drawing lessons from thedomestic and international experts'relevant studies of IPO under-pricing.In the first place, this paper introduces the related theories about the IPO under-pricing,makes a brief introduction to it, discusses the positive and negative impacts that the IPOunder-pricing has on the security market, summarizes the overseas experts'theories about IPOunder-pricing from the different perspectives. Then, this paper carefully analyzes the fivestages of Growth Enterprise Board Market:brew, prepare, suspend, restart, new develop. Thegreat significance of Growth Enterprise Board Market is analyzed at macroscopic view andmicroscopic view. It describes the present situation from the point of the number of listedcompanies and the interval. It puts forward the IPO under-pricing by analyzing the IPOpricing efficiency. In order to further analyze the IPO under-pricing of Growth EnterpriseBoard Market, it analyzes the Growth Enterprise Board Market's IPO from the issue price, theIPO P/E ratio, and the excessive raised-fund, put emphasis on analyzing the GrowthEnterprise Board Markets IPO under-pricing rate from the listed batches, the sectors, theeconomic regions and the reform of the IPO system. It is found that there are quite serious IPOunder-pricing problem on the Growth Enterprise Board Market. Thirdly, on the base of thetheory analysis,this paper uses the interval between issuing and listing of securities, the IPOP/E ratio, the turnover rate, the lot winning rate and the total asset as dependent variables andIPO Under-pricing rate as independent variables, builds the structural multivariate linearregression model and makes an empirical analysis of these factors to analyze the factorsaffecting the change of the IPO under-pricing. The result shows that the interval, the IPO P/E ratio, the turnover rate and the lot winning rate have a remarkable effect on the IPO under-pricing rate, but the total asset has no significant influence on it. It is found that the maininfluential factors of IPO Under-pricing rate on the Growth Enterprise Board Market aresummarized in five aspects, such as: the market atmosphere, the listed company's informationdisclosure system, the supply of and demand for the shares, the initial public offering system,and security companies. Finally, on the basis of summarizing the empirical studies, proposeeffective measures to perfect the under-pricing of Growth Enterprise Board Market arepresented from different point of views, such as: continue to deepen the reform about theinitial public offering system in terms of the issuing price, the issuing way, and the issuingpace; perfect the listed company's information disclosure system in terms of the transactionregulations, the core technology, the excessive rasied-fund and the markets'regulation;optimize the investors'structure in terms of the institutional investors and the individualinvestors; standardize the security company in terms of the operation, the market share, theinternal control and the supervision.