Research On IPO Underpricing In China Under The Trend Of Registration System

The issue of the underpricing of new shares is a common phenomenon in the securities markets of the world.The reasons behind it come from many aspects.The phenomenon of underpricing of new stocks in China is particularly serious.IPO pricing cannot reflect the real value of new shares and market demand.This article focuses on the fundamental causes of the high underpricing rate of new stocks in China since the registration system reform,and proposes targeted solutions to the problems,providing effective suggestions for the reform of the registration system at the supervisory level.The high depreciation rate of new shares mainly comes from two aspects.On the one hand,issuers or underwriters lower IPO prices for new IPOs to lower than their real prices,and on the other hand may come from investors’ blind optimism about new stocks.The fair value of new shares after going public exceeds the real price.This paper will examine the influence of these two factors on the high-price-price of new stocks through the stochastic frontier model and the multiple linear regression model.In order to study whether the IPO pricing in the primary market has a behavior of the underwriter or issuer to lower the issue price since the reform of the registration system in China,the paper uses the stochastic frontier model in efficiency economics to construct a stochastic frontier model and draws A shares.The effective frontier of the issue price,which in turn measures the efficiency of pricing in the primary market,can be found through the stochastic frontier model.There is no issuer or underwriting merchant to lower the issue price in China’s new stock pricing.There is no pricing in the new stock market.With regard to low issues,the high underpricing rate of new stocks is largely attributed to the irrationality of investors.In order to further verify this conclusion,this paper has constructed a multiple linear regression model based on irrational factors of investors,and found out through model regression results.The underpricing of new shares is largely influenced by the issue price of new shares,the success rate,the size of companies,and the underpricing rate of recently listed companies in the same industry.Therefore,we can conclude that the high price of new stocks is greatly affected by investors.With the influence of rational factors,market investors have a preference for low-priced stocks,and they have the preference will also be affected by the high initial depreciation of new shares at the same time.Therefore,the new stocks are blindly optimistic,the “unbeaten new stocks” are expected,the small-cap stocks are more likely to be hype,and the low-priced stocks have more room to rise.Factors,the reality that superimposed new stocks are in short supply is the root cause of the high underpricing rate of new stocks.Finally,this article proposes the following suggestions for promoting the pricing of new share offerings in the reform of the registration system,perfecting the pricing mechanism for new stocks in the primary market,and including other fundamental factors other than the profitability of the issuing company into the pricing of new shares,liberalizing administrative controls,and increasing Rational guidance to market investors,a reasonable increase in the supply of new shares,and crackdown on hype.Let the primary market of new stocks be reasonably priced and investors can invest rationally.