The Impact Of Market Regulatory,Accounting Conservatism On IPO Underpricing

Since Chinese securities market was established,there have been IPO underpricing phenomenon.And in 1995,IPO underpricing had reached its highest level on record(640%).Boulton et al.(2011)conducted empirical studies on 37 countries and ranked IPO underpricing in each country.He found that Chinese IPO underpricing was highest(up to 120.7%),while the US,Malaysia and Japan were 33.9%,55.8% and 42.3%.Compared with the western developed countries,Chinese market is still at a premature stage and the market supervision which supported the market to operate is not perfect.The supervision system as one of the composition of the securities market operation system can effectively enhance the operational efficiency of the securities market,eliminate the disorder and chaos in the market,and ensure the healthy and orderly development of the market.Privy to superior information,some companies will fabricate the data to acquire the excess return.What's more,the accounting information of IPO enterprises will affect investors' judgment on the quality of enterprises,which is an important source and guidance.Obviously,higher quality of accounting information is help to optimize resource distribution and decrease the informational asymmetry.In this context,the paper aims at studying the effects of market regulation and accounting conservatism on the impact of IPO underpriced.The paper first combs the existing research on market regulation,accounting conservatism and IPO underpricing,and analyzes the theory of principal-agent theory,signal transfer theory and winner's curse theory.Then,combined with the aforementioned theoretical analysis,the paper put forward the research hypothesis and build models.This paper takes the A-listed IPO enterprises from 2008 to 2012 as the sample,and refined the market regulation into the legal system and the media supervision.The result shows that in the aspect of market supervision,the perfecter the legal system,the lower the IPO underpriced.While at the same time,when the enterprise is in a better media regulatory environment,it helps to reduce the IPO underpricing.And the accounting conservatism is negatively correlated with the IPO underpricing,it means the higher the accounting conservatism,the lower the IPO underpricing.In addition,this paper also examines the impact of accounting conservatism on IPO underpricing in different market regulatory environments.The results show that there is a significant negative correlation between accounting conservatism and IPO underpricing in the environment with high market supervision.In the environment of insufficient market supervision,the positive effect of accounting conservatism on IPO underpricing is not obvious.