The Impact Of The "Issuance Examination Committee" Contact On The Resource Allocation Efficiency Of The IPO Market In China

Under our IPO approval system, the issuance examination committee still has the strong power of making the decision on the qualification for listing in China stock market. The listing qualification becomes a "scarce resource". Listing means "profit". The phenomenon of right rent-seeking around the issuance examination committee is easy to appear in our IPO market. The main performance is Companies intends to IPO contact with the issuance examination committee members through a variety of ways. To be specific, if the companies that want to IPO engage the accounting firm or the law office where the current issuance examination committee members used to work at, then we hold that these companies have issuance examination committee contact. This "contact" could theoretically reduce the resource allocation efficiency of IPO Market. It’s an important reason to promote the reform of the IPO registration system. Then whether the "issuance examination committee" contact reduced the resource allocation efficiency of our IPO Market or not?To solve this problem, this paper chooses the companies to submit IPO applications for A shares market. By manually collecting these companies’ issuance examination committee contact data, empirically analyzing two key issues related to resource allocation efficiency of IPO Market:(1)Controlling for other conditions, whether the issuance examination committee contact significantly increased the probability of IPO approval? (2)Compared with the company without issuance examination committee contact when controlling for other conditions, whether the performance of contact company after IPO is significantly worse than the performance before IPO? And to test the robustness of the results, the sample was divided into three categories first according to the listing plate. Then it was divided into two categories, IPO before 2013 and after 2013. These two classification methods are used to test issue (1). Meanwhile, to test issue (2), we also dividing the whole sample into three categories according to the listing plate. The results show as follows:the issuance examination committee contact significantly increased the probability of IPO approval, and it has a positive correlation with the intensity of the contact. This conclusion was set up in the whole sample, small and medium-sized board, the gem and the IPO before 2013. The change of the company’s performance between before and after IPO is significantly negative correlated with the contact and the intensity of the contact. This conclusion was set up in the whole sample, small and medium-sized board and the gem sample. This shows that the "issuance examination committee" contact indeed reduced the resource allocation efficiency of IPO Market, and mainly reduced the efficiency of small and medium-sized panels and the gem. The conclusion supports the reform of the registration system of new shares issued, and also provides an important empirical evidence for the reform of the registration system.