Problems And Countermeasures Of IPO System

Despite international financial crisis, China’s A-share IPOs was restarted in June2009, which meant a great deal to the country’s capital market. But since then therehas been growing concerns over high issue price, P/E ratios, oversubscribed funds(Three Highs) and fraudulent information disclosure. The problems coupled withA-share IPOs have been thus under scrutiny of both experts and mass media. Inresponse, China Securities Regulatory Commission and its afflicted two exchangeshave formulated P/E ratios guideline, moved up information disclosure schedule, andreformed inquiry mechanism etc. Also, authorities from regulatory bodies haveconstantly sought justifications for both the capital market and IPOs. Even so, theproblems have not been alleviated.In regard to the problems with China’s IPOs, the current thesis, which beginsfrom evolution of the country’s IPOs system, examines deficiencies in legislations inlight of stock market’s function as a financing channel. In specific, the IPOs betweenthe GEM listing in October2009and December2012are taken as research samples,together with concrete cases, to first look at such problems as Three Highs, fraudulentinformation disclosure, and listing fraud, and then dig up fundamental contributingfactors found in the entire system.Strategies to tackle the problems above are proposed at the end of the thesis. Theauthor believes improving the current IPOs system by restructuring its core approvalmechanism should be put at the forefront. Meanwhile, information disclosure shouldbe tightened up and legislation system be upgraded, thus gradually developing asound stock market in line with China’s economic growth.