An Empirical Analysis Of A-share IPO Underpricing Rate

IPO underpricing refers to the economic phenomenon that the IPO price is lower than the initial market price,which is a worldwide capital market problem.China's stock market belongs to the emerging market.Some historical and social factors have made China's stock market form many characteristics different from foreign mature markets and even some emerging markets.The most typical characteristic is the persistent IPO underpricing for many years,which forms a long-term vicious circle with the growing irrational speculation in the stock market,which is harmful to the health of the financial industry Development has brought about considerable negative effects.Based on stochastic boundary analysis model and multiple linear regression model,it make out IPO underpricing in China.The purpose explains the causes of IPO underpricing in China and put forward countermeasures and suggestions.The sample data of this paper selects 1428 stocks publicly issued in Shanghai and Shenzhen main board from 2014 to 2020,and the selected samples cover most industry sectors.This paper summarizes the mainstream theories of IPO underpricing in domestic and foreign academic circles.Combined with the actual situation of China's A-share market,the factors that affect IPO underpricing are summarized into three categories: related performance of listed stocks,market reaction and underwriting strength,and further subdivided into 11 factors,which are divided into primary index and secondary index to predict their correlation with IPO underpricing.Then,we test and analyze the underpricing phenomenon of 1428A-share IPOs through stochastic boundary model and multiple linear regression model.One is to determine the stochastic upper boundary and stochastic lower boundary with the help of stochastic boundary model,so as to judge that China's IPO pricing is near the effective upper boundary and there is an obvious stochastic lower boundary.It can be seen that the reason for the abnormally high IPO underpricing in China's A-share market lies in the irrational speculative atmosphere in the secondary market,which is full of a large number of demandfor new shares eager for quick success and instant benefits.Second,with the help of the traditional multiple linear regression model,this paper makes a correlation analysis and test on the three factors that affect IPO underpricing,and concludes that the relevant performance of listed stocks,market reaction and underwriting strength are the important reasons that affect IPO underpricing.Finally,according to the empirical conclusion,the paper puts forward relevant policy suggestions on how to deal with the underpricing of A-share IPO,including the use of market regulation mechanism,improving the IPO system,improving the information disclosure mechanism,creating a rational investment environment,and playing the intermediary role of securities companies.This study uses stochastic boundary model to explore the internal influence mechanism of IPO underpricing.It aims to further explore the influence of listed companies,market reaction and the strength of securities companies on IPO underpricing in the secondary market,find out the mechanism,and put forward more targeted policy suggestions,so as to provide more evidence support for other scholars to further study IPO underpricing It has certain theoretical and practical significance for the government to provide a more solid reference for policy-making.