Research On The Relation Of Underwriter Reputation And IPO Underpricing

The sixties of last century, the American scholars discovered the phenomenon of IPO underpricing, since then, the phenomenon of IPO underpricing is always hot research field of financial experts. The influence factor of IPO underpricing is so much, and underwriter reputation is one of important factors. According to information asymmetry theory, between pre-listed companies and investors exist serious phenomenon of information asymmetry, and underwriter as the third-parties agency that connect pre-listed companies with investors, and underwriter play a important role to eliminate the serious phenomenon of information asymmetry between pre-listed companies and investors.Underwriter reputation is overall evaluation of outside for long-term performance of underwriter and important intangible capital of underwriter. When underwriter underwrite the stock of pre-listed companies, in order to maintain the hard-earned reputation, high reputation underwriter will disclosure dutifully and detailedly the information of pre-listed companies, price stock accurately, so the IPO underpricing rate of stock that high reputation underwriter underwrite is relative low. But emerging market countries, the efficiency of security market is not high, the degree of marketization of IPO system is not strong, relational laws and regulations are not perfect, so the relation of underwriter reputation and IPO underpricing is not very obvious in China.Based on all A-share IPO data of Shanghai and Shenzhen in 2008,2009 years, explore the relation of underwriter reputation and IPO underpricing. The structure of the paper as follows:the first part explain the background of the paper, and domestic and foreign literature review of the relation of underwriter reputation and IPO underpricing; the second part explain the Carter-Manster model; the third part explain the evaluation mechanism of underwriter reputation and the paper uses method of measuring underwriter reputation; the fourth part conducts empirical analysis for the relation of underwriter reputation and IPO underpricing; the fifth part provide policy recommendations to improve the system of underwriter reputation.