An Empirical Study Of Venture Capital And IPO Underpricing

China's venture capital(VC)mainly invests in consumption,high-tech industries,and these enterprises are mainly listed on the GEM.China's GEM was established in 2009.By the end of 2017,a total of 712 enterprises had successfully listed on the GEM.The Securities Regulatory Commission issued a document on June 13,2014,stipulating that the underpricing rate of IPOs on the first day of listing of new shares is up to 44%.Premier Li Keqiang clearly put forward the idea of mass entrepreneurship and innovation in his government work report on March 5,2015.So China entered the era of double entrepreneurship,and the upsurge of entrepreneurship and investment was set off all over the country.Firstly,this paper states the existing theories of IPO underpricing at home and abroad and the impact of venture capital on the underpricing rate of IPO.The literature research on IPO underpricing includes information asymmetry theory,institutional cause theory,ownership decentralization theory and behavioral finance theory.The impact of venture capital on IPO underpricing mainly includes that venture capital will reduce IPO underpricing,increase IPO Underpricing and have no impact on IPO underpricing.Among them,reducing IPO underpricing is the theory of certification supervision,and improving IPO underpricing is a name-for-name hypothesis.Then,this paper introduces the emergence and development of venture capital industry and GEM in detail,and analyses the reasons for the data changes of venture capital and GEM in the light of different stages of policies and economic status.This paper mainly divides the data of GEM from its inception to the end of 2017 into three stages.The division of stages is based on the implementation of the 44%underpricing rate limit(June 3,2014)and the arrival of the era of double creation(March 5,2015).The explanatory variable is "whether there is venture capital support",the explained variable is "adjusted return on the first day of listing" or"verage adjusted rate of return on 28-63-91 days".For the Data of different stages:First,descriptive statistics of variables are carried out.Secondly,the explanatory variables "adjusted return on the first day of listing" and "average adjusted rate of return on 28-63-91 days" are used to regression the explained variables.Thirdly,Pearson correlation coefficient test and stepwise regression are carried out on the control variables to screen out the non-explanatory variables.Finally,the explanatory variable "whether or not there is venture capital support" is added to the control variables selected at different stages,to carry on multivariate linear regression.According to the results of empirical research,this paper draws the following conclusions:(1)In the first stage,the participation of PE/VC will increase the IPO underpricing of listed companies on GEM.(2)In the second and third stage,the participation of PE/VC has no effect on the underpricing of IPO in the GEM listed companies.(3)the enthusiasm of Chinese investors to invest in new shares has been improving.The high IPO underpricing rate in the current stage of China's gem is mainly caused by inadequate supply of new shares and irrational speculation.The innovation of this paper is to divide the listed companies of GEM into three stages,which are based on the promulgation of some policies.Another innovation of this paper is to select different indicators to measure the underpricing rate of IPO at different stages,especially the second and third stages for the selection of the average adjusted rate of return of 38 days,63 days and 91 days.