| The premium phenomenon in an Initial Public Offering (IPO) is widespreadin the global capital markets. The capital markets in western countries arerelatively mature. The secondary market was basically identified as a semi-strongefficient, thus the exploration for the IPO premium was mainly focused on theunder-price problem in primary market. China’s IPO market in recent yearswidespread the phenomenon of the "three high"(the high issue price, the highprice-earnings ratio and the high Super-raising amount)。More and more scholarsbelieve that the formation of the IPO premium is not due to low market IPOpricing, but because of the irrational investment behavior of investors in thesecondary market。And then people turn to study secondary market, to explorein-depth root causes of high IPO premium. The Growth Enterprise Market (GEM)of China officially launched in October2009, the IPO premium has beenremained high position for a long time. Its average was still up43.6times. Thisphenomenon is particularly unfavorable for the efficiency of resource allocation inthe entire GEM, for the direct financing and refinancing of outstanding enterprise,and for the stable and healthy long-term development of the market. Seeking basiccauses and impact factors of IPO premium phenomenon in secondary market haveimportant practical significance.The main purpose of this article is that the investment behaviors of differentgroups on the first day of IPO in GEM were parsed by using of the fittedbehavioral finance theory. With the results of empirical analysis and the microinvestment situation in market, it was revealed that how the market behaviors ofmain groups in GEM led into the IPO premium. Specific and targeted suggestionson policies and regulations as well as investment ideas are given. The investing groups participating in speculating of new shares in GEM daywere classified as medium-small retail (individual investors), the hot moneyprivate and institutions. The characteristics and style of investment for everyinvesting group were analyzed respectively, and the status of overall investmentmarket was described. The dynamic premium of IPO in GEM was attempted toobserve from the perspective of behavioral finance. By means of behavioralfinance theory (such as investor sentiment, heterogeneous beliefs, anchoredpsychological and framing effects), the major market characteristics of variousinvesting groups in speculation of new share were analyzed and combed. Thedominant factors of the IPO premium rate and the market situation were furtherrevealed by using quantitative micro-empirical analysis. Some factors involvedrarely by other literatures were selected as the explanatory variables, such asopening turnover, ultra raise multiples of funds, the frozen funds for onlinesubscription, the institutional subscription magnification, the online subscriptionmagnification, the online issued market value. The data processing and empiricalresearching were made by using of software Eviews6and Excel.The theoretical analysis and empirical studies have shown that the privateplacements of hot money and some institutions were the dominant factorpromoting IPO premium in secondary market. They choose the new shares withthe smaller online issued market value and the larger frozen funds for onlinesubscription as the main speculation objet, then push up opening turnover andobtain huge profits. It is easy in this process to produce the high premium rate.The retails were the fueling factor of IPO premium. They have common anchoringpsychological that any IPO stock must generate huge profits. They often have theinherently irrational behavior during making the decisions of investment policy,thus expand the level of IPO premium.At the end, basing on the above-mentioned research results and the overallinvestment situation in the GEM, aiming at each link of speculation of new sharesprocess and relates to factors, put forward the corresponding suggestions about themarket management rules and countermeasures for suppressing the acts of illegal profit. The suggestions are also given that retails reinforces learning andself-discipline and participates cautiously in IPO speculation of GEM. |
PDF Full Text Request