Underwriter Networks And Initial Public Offerings

Since the reform of the registration system was introduced at the Third Plenary Session of the 18th CPC Central Committee,China has successively undergone the examination and approval system,the approval-channel system,and the approval-sponsorship system,and nowadays the stock issuance system has started the transition to the registration system.Similarly,the pricing mechanism has undergone a process of change from fixed price to the inquiry system to the underwriter’s independent placing system,which leads to more marketization.Under such a regulatory background,the underwriter’s market position has become more and more important,and its social network relationship will be one of the main manifestations of its market position.The existing literature has studied the relationship between underwriters and IPOs,but it is mainly based on the underwriter’s reputation perspective to interpret the influence of single underwriters on the issuance of new stocks.It has not studied the mechanism of underwriters’ influence on IPOs from the perspective of the entire social network.This paper introduces the theory of social network relations to study the influence of the network position of the lead underwriter on the IPO.This article takes the 2009-2015 China A-share listed company as the research object,and examines the effect of the underwriter’s network location characteristics on the characteristics of IPO,earnings quality and long-term performance in the later period.The study found that the higher the degree of network centrality of the IPO lead underwriter,the shorter the time for the listed company to meet,that is,the higher the efficiency of the meeting;accordingly,as the compensation for the effective resources brought by the high centrality of the lead underwriter,The underwriting fee of the underwriters with higher centrality is also higher.Secondly,the higher the network center of the underwriter is,the lower the initial underpricing rate of the listed company is.This shows that underwriters with a high degree of network centering can Effectively ease the underpricing of the initial public offering;Thirdly,the high-network-centric lead underwriters have a certain role in enhancing the earnings quality of listed companies’IPOs in the previous year and the first two years;in the end,the underwriters are in an advantageous position in the network.It can improve the ability of underwriters to disseminate information and obtain effective information,so that the long-term market performance and accounting performance of listed companies perform better.