Research On The Relation Of Underwriter Reputation And IPO Pricing Efficiency In Chinese GEM

Since the 1960 s, foreign scholars began to study the IPO under-pricing phenomenon, and, the research on IPO long-run underperformance is some years later until 1991.In the early, Scholars have focused on the interpretation of these two phenomena. One of these factors is underwriter reputation. During the IPO, as both Information producers and information transmission, the underwriters became the important bridge connecting the companies and investors.Underwritersplay a role of " information producer" and " certifying agency". Empirical results show that underwriter have important effects on IPO under-pricing and IPO long-run underperformance. Underwriter reputation are negatively related with IPO under-pricing, and positively correlated with IPO Long-run Underperformance. Because in a mature stock market, Underwriters built up a reputation mechanism through long-term operation and game. Participants in the securities market are known and recognized the reputation. In order to maintain its high reputation and derive long-term benefits, on the one hand, underwriter will use professional quality with investigation of quasi underwriting companies. The stock price and the inner value are as consistent as possible. For listed companies, select a high reputation of underwriters to full specified amount to raise the money soon. On the other hand, the underwriters will rely on reputation advantage to choose the development of better quality, more stable companies were selected as the object of underwriter, the enterprise after the listed shares on the secondary market performance will be remained largely unchanged and more popular with investors.The security market of China developed later, whether underwriter reputation can also play a role or not in our country is unclear. This paper selects more than four hundred public companies listed in the GEM market from 2009 to 2015 as the sample to research the relationship between underwriter reputation and IPO pricing efficiency. This paper is divides into five parts: First part introduces the background of this thesis, and combs of the related literature at home and abroad system, than gives a briefly discuss. The second part explains that If underwriter loses its reputation, underwriter’s function of " information producer" and " certifying agency" will lose foundation. Part three, establish a composite index which set up a foundation for the next step. Part four analysis the relationship between underwriter reputation and IPO under-pricing, IPO Long-run Underperformance. The last section briefly summarizes the empirical study’s findings and puts forward some policy proposals for building the reputation system in China.At present, underwriter reputation mechanism is gradually established. The empirical results show that underwriter reputation can effectively reduce IPO underpricing, but to alleviate the IPO long run underperformance is not obvious.