The Research Of The Reforms Of Inquiry System Have On IPO Pricing Efficiency

Since January 1,2005,China formally issued inquiry system on IPO.Since the introduction of the system,the rationality of the system has aroused significant social discussion.The debate over the system mostly focused on the higher initial return on the first day,the relatively high level of IPO underpricing.This paper focuses on how the primary market and the secondary market’s pricing efficiency react since the implementation of the inquiry system.In this paper,we use the analysis method of principal component factors extracted by value variables,and use the IPO data of A shares in 2005-2013 to analyze the pricing efficiency of IPO in primary and secondary market under inquiry system.And further we compare the four stages of the inquiry system,divided by the three demarcation points in 2009,2010 and 2012.The research shows that the reform of the new inquiry system at all stages performed better compared to the old inquiry system period.The pricing efficiency of IPO in the third stage of the reforms is the highest,and the reform of the IPO pricing system has a certain effect.In the various stages of the study,the primary market pricing efficiency is higher than the secondary market,indicating that IPO issue price than the first day of the closing price on IPO to better reflect the company’s intrinsic value,resulting in overestimation of IPO underpricing is mainly due to the secondary market price is unrealistically high.