Institutional Investor Ownership,Underwriter Reputation And IPO Underpricing

IPO underpricing has been a common phenomenon in the global stock market since it was proposed.Compared with developed countries,IPO underpricing in Chinas stock market is more serious.Since China adopted the inquiry system in the issuance system in 2005,institutional investors began to actively participate in the issuing process of new shares,and with the development of China's capital market becoming more and more mature,institutional investors play an increasingly important role in the stock market.In the process of the issue of shares,the underwriters in offering prices set at the same time promote to institutional investors,and according to the information provided by the institutional investors reasonable predict the real value of enterprise,thus accurate pricing,so the underwriters in offering also plays an important role in the process,it can make a reasonable price will eventually affect the IPO underpricing.What is the effect of institutional investors' shareholding on IPO underpricing,and what role does the reputation of the underwriter as an intermediary play in the two.This is the focus of this paper.Therefore,this paper selected all a-share companies listed on the Shanghai and shenzhen stock exchanges from 2010 to 2017 as the research samples,and made an in-depth analysis of the effect of institutional investor shareholding and underwriter reputation on IPO underpricing,and further analyzes whether the relationship between the three will change before and after the first-day increase limit.According to previous literatures,there are few domestic studies on the impact of institutional investor shareholding and underwriter reputation on IPO underpricing,and even fewer studies on the three factors in different institutional periods.Therefore,the research done in this paper in this context may be of certain reference value.The research results of this paper show that:firstly,the shareholding of institutional investors is significantly positively correlated with IPO underpricing,and the reputation of underwriters plays an enhanced regulating role in the two.Compared to individuals,institutional investors has more information advantage,they can pass on my knowledge of the hands of determine the future development of the enterprise,in order to protect their own interests are not affected by loss of institutional investors will have to hide the behavior of the real demand,in order to avoid this kind of phenomenon,the underwriters will promise to institutional investors more stake,and prices artificially low,thus lead to the IPO underpricing phenomenon.Second,institutional investors holding shares can effectively reduce IPO underpricing in the absence of first-day increase restrictions.In this stage,institutional investors play the role of "price discovery and information certification",and can effectively pass the information they have mastered to underwriters,so that the set issue price is close to the real value of the enterprise,thus reducing the occurrence of underpricing.Third,institutional investor ownership is positively correlated with IPO underpricing when the IPO price is limited on the first day of listing.This is because institutional investors more to consider their own interests at this time,use their information for underwriters of equity division,at the same time the underwriters to encourage institutional investors real quotation,will be released artificially low prices,implicit excess returns to the investors to transfer,as they get information the price.Fourthly,regardless of the impact of policies or not,the reputation of underwriters always plays an enhanced regulating role in institutional investors' shareholding and IPO underpricing.Through the analysis of the research conclusion of this paper,the author further puts forward relevant Suggestions to provide some reference for the development of the stock market.