The Influences Of Chinese New Shares Issued Mechanism On IPO Underpricing Rates And Improvement Recommendations

Within the global capital market, the IPO underpricing rates of Chinese A-Share market are much higher than those in the western maturer capital markets. High underpricing rates lead directly to huge subscribed capital accumulated on the primary market and the great reduction of the intrinsic resource allocation optimization function of capital market, resulting in a huge amount of speculation and inimical to the healthy development of Chinese capital market. For the phenomenon of high IPO underpricing rates in the Chinese A-Share market, although many scholars have done lots of discussions internationally, these discussions more or less point out some problems existing in the Chinese capital market. And in the practice, China Securities Regulatory Commission successively issued a number of policies in recent years aimed to control the excessive IPO underpricing and optimize the new shares issued mechanism. Although these policies obtained some results, the market-oriented reform direction of new shares issued mechanism is under debating. For the above reasons, the article selects2150A shares in Shanghai and Shenzhen A-share markets during1996-2012.9.30as samples, carry out comprehensive research on the new shares issued mechanism and the IPO underpricing phenomenon of the Chinese A-share market, try to figure out the reasons of high IPO underpricing rates in China and put forward the corresponding suggestions. This thesis is composed of five chapters, and the main contents are as follow:Chapter1:Introduction. This chapter introduces the background and significance of this article, and briefly describes the article’s framework, and also states the innovations and drawbacks of the thesis.Chapter2:Literature review. This chapter begins with the3anomalies in the IPO market, and then card the choroids of IPO underpricing researches at home and abroad to provide theoretical basis for the modeling below, finally makes appropriate comments on existing literature.Chapter3:This chapter mainly studies the development progress of new shares issued mechanism in China. This chapter also has a preliminary analysis on the general characteristics of Chinese IPO underpricing in order to lay the foundation for the next chapter.Chapter4:Echoed by the last chapter, it empirically further analyzes the high IPO underpricing in China. At first, it uses the single-way ANOVA to analyze the IPO underpricing rates over a series of years from censorship and pricing mechanism separately. Subsequently, from the definition of the IPO underpricing formula, it conducts stepwise regression analysis on impact factors of IPO underpricing of different stages under pricing mechanism. The results illustrate that the relevant factors on the secondary market have a larger impact on the IPO underpricing than those on the primary market.Chapter5:Through the description and analysis in the above chapters, this chapter makes a conclusion of this article, and also puts forward several policy recommendations for the reform of present new shares issued mechanism in China.