Study On High Yield Initial Sme Board Stock IPO

IPO’abnormal initial return(AIR) has been an anomaly existing in almost all stock markets. It exists in the developed countries’ stock markets and developing countries’ stock markets. The degree of IPO’abnormal initial return in the developing countries’ stock markets is higher than developed countries’ stock markets. In resent research researchers have provided two explanations for this new issues puzzle. The one is underpricing and the other is overvaluation. This paper analyzes AIR in Chinese SME market from three aspects:underpricing in the primary market, overvaluation in the secondary market, And the current stock market system. In this paper AIR is that closing price are higher than issue price. Underpricing is that intrinsic price is higher than issue price Overvaluation is that closing price is higher than intrinsic price.On May17th2004Small and Medium Enterprise Board was established. At the present time its developing time is shorter system is perfecting, and few specialists and scholars process empirical studies on SME Board. Based on that according to its characteristics, this dissertation does the empirical study on IPO’abnormal initial return AIR in SME Board. This paper tries to explain IPO’abnormal initial return in SME Board. This paper tries to explain IPO’abnormal initial return SME Board from underpricing and overpricing. First the paper will introduce the background meanings and innovation of this research. Secondly, at the base of research review of IPO’abnormal initial return put by foreigner and home scholars the paper will get the concoction of previous researchers’ research. After that, the paper will compare SME board with the main board and growth enterprise market. Then theoretical explain of IPO’abnormal initial return in SME Board will be put and then is the experiential analysis In order to explain AIR the sample of this paper is490IPO’companies in the SME board from2011to2012,the context will choose some typical variables of underpricing and overvaluation in order to find out the exploitation of AIR. At last the paper will give the conclusions and suggestions. Unthinking of the opportunity cost of purchasing capital the IPO’AIR will be increased with the year the exchange rate is very significant before or after the reforms of split share structure. This suggests that both the pricing efficiency of the primary and secondary market will affect AIR. In order to reduce AIR to a reasonable level a healthy secondary market is as the same important as a perfect primary market. Moreover through rebalancing the interest of market players the removing of segmentation of equity could improve the efficiency of the primary market and reduce AIR.