Market Environment?Accounting Conservatism And IPO Underpricing

IPO underpricing refers to the phenomenon that the price of the initial public offering stock is lower and the first day trading price rises sharply,resulting in the first day closing price higher than the issue price,resulting in ultra-high yield.IPO underpricing exists widely in the stock markets of all countries in the world,and the IPO underpricing in China is much higher than that in other countries and regions.Over-high IPO underpricing will lead to a series of problems,such as lower efficiency of resource allocation,aggravating the abnormal volatility of the stock market.This paper studies the relationship among market environment,accounting conservatism and IPO underpricing by combining the micro-characteristics of enterprises with macro-environment.As the development of the market in the region where the listed companies are located and the situation of the stock market when they are listed will have an impact on IPO underpricing,this paper divides the market environment into institutional environment and market situation.Specifically,this paper studies three issues.The first is the impact of accounting conservatism on IPO underpricing;the second is the impact of institutional environment on the relationship between accounting conservatism and IPO underpricing;and the third is the impact of market situation on the relationship between accounting conservatism and IPO underpricing.Through the whole sample regression and grouping regression,the following conclusions are drawn:(1)Accounting conservatism and IPO underpricing are negatively correlated,that is,accounting conservatism can significantly reduce the level of IPO underpricing.(2)When the institutional environment of the company is good,accounting conservatism is negatively correlated with IPO underpricing;when the institutional environment of the company is poor,accounting conservatism is negatively correlated with IPO underpricing,but not significant.(3)In bear market,accounting conservatism is negatively correlated with IPO underpricing,while in bull market,accounting conservatism is negatively correlated with IPO underpricing,but not significantly.(4)Abolishing the prepayment system will lead to an increase in IPO underpricing.(5)Compared with the main board market,the accounting conservatism of companies listed on SME and GEM has a more significant impact on IPO underpricing.Based on the research and conclusions of this paper,some policy recommendations are put forward.Firstly,IPO companies should attach importance to the role of accounting conservatism.Secondly,strengthen the supervision of information disclosure and improve thedisclosure mechanism.Thirdly,strengthen the construction of regional institutional environment.Fourthly,improve the structure of investors and improve the professional quality of investors.Fifthly,we should improve the stock issuing system and push forward the registration system reform.