An Empirical Research Of IPO Underpricing In Gem Market: Based On Firm Characteristics Perspective

IPO underpricing, is the issue of the shares listed on the first day closing price ishigher than the issue price, the phenomenon of excess return. IPO underpricingphenomenon is prevalent in all countries in the securities market, is one of the tenmysteries of securities research. As China’s GEM platform for small and mediumhigh-tech corporate finance, there is also the phenomenon of IPO underpricing.Excessive underpricing, is not conducive to the functioning ofthe GEM market and itsown development. This paper from the perspective of firm characteristics to researchGEM market underpricing phenomenon, seeking a reasonable explanation, hasprofound theoretical and practical significance.In this paper, chosen355companies from October30,2009to October30,2013in Shenzhen GEM successful IPO as samples, based on asymmetric informationtheory, from the information about characteristics of the company’s that the value oflisted companies perspective of the general investors can get in the prospectusdeparture, study its effect on the GEM IPO underpricing. according to defination ofIPO Underpricing, using the stochastic frontier approach to test the reasonableness ofthe price of new shares in the primary market, to judge theprimary market pricingimpact on the underpricing. On this basis, select the variable factors of companyfeatures that could affect the GEM IPO underpricing, establish multiple regressionmodel to analyze the effects of variables on the secondary market underpricingphenomenon.The empirical results shows that the GEM market pricing is reasonable andeffective, the transaction price in the primary market has no effect on the highunderpricing. It follows that the high underpricing of GEM is composed oftransactions in the secondary market caused. Factor in the selection of the firmcharacteristics variables, company size, profitability, Inc. Region3variables passedsignificant test of underpricing has a significant impact. Therefore, we believe that allmarket participants, especially the majority of investors should focus on theinformation reflected in the prospectus in order to ensure the success of the IPO.Finally, according to the results of empirical research papers drawn make relevantpolicy recommendations.