Empirical Research On The Relationship Of Underwriter Reputation And IPO Under Pricing,Long-Term Returns Under The Cold Or Hot Market

Underwriters, as the primary market participants,the fundamental function is making a reasonable price to raise funds for the enterprise. In this way,they allocate resources efficiently of the securities market. With registration system is coming, an increasing number of IPO is about to begin. As a new start of the capital market reform, new issues is listed into the new mode and the underwriter’s behavior plays a key role in the securities market, especially in the issue market. Scholars begin to realize that the behavior of the underwriters affect initial price of new issues, and they make a series of empirical analysis, such as, the relationship of the underwriter reputation and the initial price’ setting (IPO underpricing)By Comparing literature at home and abroad, author find the securities market in our country, the underwriter reputation mechanism is weaken, while the domestic Relationship between underwriter reputation and IPO under pricing is obviously negative.Based on the previous research and summarized theory,new views are put forward, which the number of domestic underwriters may be too many, so the excessive competition may be a major factor lead to weakening underwriter reputation mechanism. In order to verify this viewpoint, writer will respectively discusses the influence of underwriter reputation mechanism is different, under different market conditions. In more detail, writer will define the market is hot or cold according to the number of initial public offer a month. The paper will focus on researching underwriter reputation mechanism under the separate cold or hot market.If the empirical analysis shows that the underwriter reputation mechanism make a sense and make the issue price more reasonable in the hot Issue market, the author’s viewpoint is confirmed, which the excessive competition of market lead the underwriter reputation weakened. So this article’s research is not only beneficial to enrich the domestic related theories and literature about underwriter reputation, but contribute to the establishment of the underwriter reputation mechanism and healthy development of the primary market.