Study Of IPO Initial Return And Long-Term Performance In Growth Enterprises Board Of China

IPO (Initial Public Offerings) is a behaviour that a company sells its stocks(common stocks) publicly to investors on the stock market for the first time.Analysis indicates that IPO underpricing is a common phenomenon all over the stockmarket of various countries.Growth Enterprise Board was set up in Shenzhen Stock Exchange in Oct.,2010,which would make great contribution to optimize multiple levels of capitalmarket and growth of small and medium enterprises in our country. Is there IPOunderpricing in Growth Enterprise Board as well? Are reasons caused its IPOunderpricing different from those in Main Board or Small and Medium Enterprises(SMES) Board? These are research objectives of this paper.Consulting the IPO underpricing theories of the West, the findings of MainBoard and SMES board of domestic scholars and specialties of Growth EnterpriseBoard itself, this paper selects explanatory variables and positive analyses the reasonscaused IPO underpricing in Growth Enterprise Board. Low allocation rate in primarymarket and high turnover rate in secondary market are major reasons. Low allocationrate are common in Main Board and SMES Board, but it is only in Growth EnterpriseBoard that low allocation rate is the reason causing high underpricings, due to issuingauthorization in Growth Enterprise Board. High turnover rate is the reason of the pricegap between first and secondary market, which tells high speculation in secondarymarket of our country. Thanks to experiences from SMES board, more methods tominimize risks and issuing authorization, the specialties of Growth Enterprise Boarditself do not impact underpricings.