Research On The Impact Of The Quality And Quantity Of IPO Inquiry Response Letters On The Pricing Of Initial Offerings On The SSE STAR Market

On November 5,2018,Xi Jinping,General Secretary of the CCCP of China and President of China,announced the establishment of the SSE STAR Market and a launch a pilot project of Registration-based IPO regime on the SSE at the opening ceremony of the first China International Import Expo.The SSE STAR Market mainly serves scientific and technological innovation enterprises that meet the national strategy,break through key core technologies,and have a high degree of market recognition.Compared with the traditional approval system,the registration system focuses more on formal verification.The reform of the registration system of the SSE STAR Market has delegated the review authority from the CSRC to the SSE.The SSE does not guarantee the authenticity,accuracy and completeness of the application documents and the information disclosed by the enterprises to be listed,nor does it make substantive judgments on the investment value of stocks,which greatly improves the review efficiency.At the same time,the IPO registration system reform of the SSE STAR Market has fully implemented the market-oriented pricing mechanism,cancelled the direct pricing of the main board and small and medium-sized boards,and adopted the market-oriented inquiry pricing method for professional institutional investors to ensure the rationality of pricing,which is conducive to improving pricing efficiency.However,due to the characteristics of the companies to be listed on the SSE STAR Market,such as new business models,high technology content and high business risks,the Shanghai Stock.Exchange has put forward higher requirements for the information disclosure of issuers in the IPO process.At the same time,due to the lack of in-depth understanding of the inquiry and audit system of some issuers,they failed to respond effectively to the audit inquiry letter of the Shanghai Stock Exchange in combination with the company’s situation,resulting in multiple rounds of inquiry,slow audit process,and even ultimately unable to pass the audit.Therefore,the article studies the mechanism of inquiry and response letter under the reform of the registration system of the SSE STAR Market and tries to analyze the impact path and effect of the information quality of the inquiry and response letter of the IPO of the SSE STAR Market on the IPO pricing.The article adopts the double-case study method,taking OPT Machine Vision Tech Co.,Ltd.and Suzhou Veichi Electric Co.,Ltd as the research objects,taking the information asymmetry theory,the efficient market hypothesis and the disagreement hypothesis as the theoretical basis.Combining with relevant research on the IPO inquiry and review system of the SSE STAR Market enterprises under the background of registration system reform,it compares the quantity and quality of information in the inquiry and response letters during the listing process of two case companies,compare the differences of opinions on offline inquiry between two companies and their market performance after listing,and explore how the quality of information in the issuer’s inquiry response letter affects the initial pricing during the IPO process of the SSE STAR Market,as well as the impact effect.Through research,the article draws the following conclusions:First,the response letter to the IPO inquiry of the SSE STAR Market improves the information efficiency of the capital market by improving the quantity and quality of the prospectus information,ultimately making the IPO pricing more reasonable.Secondly,the higher the quantity and quality of information in the inquiry response letter,the better the improvement effect on the quantity and quality of information in the prospectus.Thirdly,the higher the quality of the information in the inquiry response letter,the more reasonable the initial pricing of the enterprise,which is manifested in the lower degree of divergence of opinions among institutional investors on offline inquiries and the smoother market fluctuations after listing.The article has strong theoretical significance and practical enlightenment.In terms of theoretical significance,the article combs the IPO inquiry and review system and its characteristics of the SSE STAR Market,clarifying the impact path and effect of the quantity and quality of inquiry and response letters on initial pricing during the IPO process of the SSE STAR Market,providing reference for the comprehensive implementation of the registration system in China.In terms of practical significance.Firstly,it is helpful for audit institutions to formulate inquiry audit policies.This article exposes common expressive defects in inquiry and response letters,and proposes targeted measures to provide reference for further improving the efficiency and effectiveness of inquiry and review in the future.Secondly,it helps issuers improve the quality of information disclosure.This article summarizes the characteristics of the inquiry review system and relevant indicators that affect the quality of information in inquiry response letters,providing empirical evidence for issuers to improve and strengthen information disclosure under the registration system reform.Thirdly,it helps investors make reasonable decisions.This article analyzes the impact of the information quality of the inquiry response letter on the IPO pricing of the SSE STAR Market companies after listing,and suggests that investors make full use of public information to make reasonable investment decisions.