Correlation Analysis Among Media Coverage,Audit Quality And IPO Underpricing

IPO underpricing refers to the listed company's initial public offering,and the market price of the listed on the first day of trading is much higher than issue price.As one of the top ten myths of modern finance,IPO underpricing contradicts the classical efficient market theory and become a hot topic in the theoretical circle.In the process of company listings,however,the role of the media cannot be ignored.Media through the information collection,selection,and spread,provide investors with more abundant information,thus affecting investor sentiment and investment decisions and causing the stock price volatility.So in this paper,it is necessary to conduct the relationship between media coverage and IPO underpricing.On April 28,2012,China Securities Regulatory Commission issued?on further deepening the reform of the IPO system guidance?.For the first time,the "guidance"reviewed the key point from judging profitability to strengthening information disclosure,and repeatedly mentioned audit known as an important mechanism.Audit is an effective supervision mechanism.On the one hand,the quality of the audit can through the verification function guarantee the reliability and authenticity of the accounting information,thus reducing information risk;on the other hand,the quality of audit through supervision function alleviats the information asymmetry between shareholders and management and agency conflicts.Therefore,how high quality audit affect the relationship between media and IPO underpricing will what impact is worth further study.In this paper,we using the investor sentiment theory,asymmetric information theory and audit demand motivation theory,analyze the correlation among media reports,audit quality and IPO underpricing and draw the following conclusions:(1)Because investors are irrational,when investors make investment decisions,they are susceptible to media and buy their attention stock,increasing stock prices,in other words,media reports can increase IPO underpricing.(2)Compared with the state-owned enterprises,non-state-owned enterprises media's coverage frequency can increase IPO underpricing.Under the background of system in our country,because of government intervention,relative to the state-owned enterprises,the media governance motive of non-state enterprise is stronger,and good corporate governance has higher future financial security and profitability and strengthen investors willing to invest.therefore,compared with the state-owned enterprises,the governance role of the media of non-state enterprises will reduce the company's financial risk,enhance profitability,and thus enhanced the investment enthusiasm of investors,eventually improving the IPO underpricing.(3)In non-state-owned enterprises,the high quality audit can strengthen positive correlation between reports frequency and IPO underpricing.The audit demand motivation theory is that independent audit by maintaining a high degree of independence,implement necessary audit procedures,to verify the fairness of the financial statements of listed companies to a certain extent and improve the authenticity and reliability of the company's financial information.High quality auditors employed by the company delivery high quality information signals to investors and verify the reliability of the media,to improve the confidence of the investors to media reports and enhance investors willing to invest,eventually improving the IPO underpricing,but this phenomenon exists only in non-state-owned enterprises.This paper based on the above theoretical analysis,uses the quantitative empirical research method to verify this theory results.We select A-share listed companies in the shenzhen stock exchange and the Shanghai stock exchange in 2009-2013 as research samples to test the relatonship among the media reports,the nature of the equity,the audit quality and IPO underpricing.Research shows that:(1)The media report frequency and IPO underpricing is related,in other words,the more the media reports frequency,the higher IPO underpricing.(2)Compared with the state-owned enterprises,non-state-owned enterprises media's coverage frequency can increase IPO underpricing.(3)In non-state enterprises,the high quality audit can strengthen positive correlation between reports frequency and IPO underpricing.The structural framework of this paper is as follows:The first part is the introduction.Reports in this part raises whether media coverage can lead to IPO underpricing and make a general overview including tthe article research background and significance,research ideas and methods and research structure respectively.The second part is literature review.This part is mainly to collect research literature about three aspects including the influence factors of IPO underpricing and how media reports and audit quality affect the IPO underpricing,to summarize the research literature.The third part is the theory summary.This part explains the meaning of media coverage and its governance effect and the meaning of audit quality and its control effect,and elaborates the investor sentiment theory,asymmetric information theory and the auditing demand theory.The fourth part is the theoretical analysis and hypothesis putting forward.This part theoretically expounds how media coverage influence the IPO underpricing,and how quality audit affect the relationship between medai reports and IPO underpricing,and puts forward three hypotheses of this article.The fifth part is the empirical test between media report and IPO underpricing.The part of the data for statistical analysis includes descriptive statistics,correlation analysis,multiple linear regression analysis and robustness testing.The sixth part is the conclusion,policy recommendations and research limitations.This part on the basis of above theoretical analysis and empirical test summarizes the research achievements of this paper,puts forward relevant policy suggestions,and points out the lack of research.