Circulation Context Of China's Stock Market Ipo Underpricing Empirical Study

Using a database of 174 pulic companies from June 19^th, 2006 to December 12^th, 2007 on Shanghai and Shenzhen Stocks Exchange in China, this research has explaored the factors which cause the IPO underpricing and examined IPO theories in mature market. Basing on the past researches and the situation of full-circulation in China, this research selects fifteen factors which may influence the IPO underpricing. And then this paper has set up a linear regression model about the IPO underpricing, examined the relationship between the factors and IPO underpricing. So the existed theories about IPO can be tested on stocks market in China.The empirical results reveal that the degree of IPO underpricing on stock market is high at the begining of full-circulation in China. The degree of IPO underpricing in Shenzhen Stock Exchange is twice of Shanghai. The accumulated rate return which reflecting the market's anticipation and first day trading ratio have positive influence on IPO underpricing ratio. The lottery rate which reflects the group effect has negative effect on IPO underpricing ratio. The behavior of market and participators is the major reasons why the IPO underpricing is high. The efficiency of IPO is low in China. The IPO theories in mature market are not very effective in China, but the theory of asymmetric information is effective in some degree.With empirical conclusions, this research puts forward some proposals and gives some suggestions for the future researches. Some measures should be taken so the stock market would be mature and effective. The participators should be more reasonable to invest on market.