Research On The Effect Of Venture Capital Syndication,Organization Form On IPO Underpricing Of GEM In China

The existing research indicates that there’s serious IPO underpricing in China’s stock market, which badly harms the stock market’s function of allocating resources and its healthy development. As to the effect of VC (venture capital) buying into an IPO company to its IPO underpricing, the scholars have made plenty of researching. But there’s little research about how the syndication of VCs and the organization form of VC impact the IPO underpricing. The paper tries to expand and supplement the existing research from this point.Based on the existing researching results about VC and IPO underpricing, the paper uses the IPOs during the period of 2009 to 2013 in ChiNext as sample and collects the venture capital data by looking up the IPO prospectuses to further research how the syndication of VCs and the organization form of VC impact the IPO underpricing. By empirical research, the paper finds:1) Compared to IPOs without VC, the IPOs backed by VC have a lower IPO underpricing; 2) Compared to IPOs backed by corporation VCs and IPOs without VC, IPOs backed by limited partnership VCs have lower IPO underpricing, and the proportion of equity of limited partnership VCs and IPO underpricing have a statistically significant negative correlation.3) Compared to IPOs backed by only one VC, those backed by more than one VCs (VC syndicate) have lower IPO underpricing, and the number of VCs and IPO underpricing also have a statistically significant negative correlation.Finally, based on the researching results, from the standpoint of the regulators, the paper makes a proposal that the regulators should perfect laws and regulations to promote limited partnership venture capital’s development and encourage the VCs to combine to form a syndicate when investing a pre-IPO company in order to reduce the IPO underpricing and improve the stock market’s function of allocating resources.