Underwriter Co-investment,Underwriter Reputation And IPO Underpricing

IPO pricing has always been a key issue to be resolved in the A-share market.Reasonable IPO pricing can reduce the loss of funds raised by companies in IPOs,reduce the speculation of new stock issuance in the A-share market,and help improve the efficiency of resource allocation and ensure the stable development of the capital market.Since the launch of the Science and Technology Innovation Board in July 201 9,the underpricing rate of IPOs has remained high.As the first attempt to reform the registration system of the A-share market,the Science and Technology Innovation Board has made many innovations in system design,such as IPO pricing methods and mandatory underwriters to follow-up.The participation of underwriters in the process of corporate IPO issuance is more in-depth than before.Therefore,this paper attempts to explore the impact of underwriters’ co-investment on IPO underpricing and the moderating role of underwriters’ reputation in the STAR Market.This paper adopts a research method that combines theory and empirical research.In terms of theory,by sorting out domestic and foreign research theories on IPO underpricing,as well as the theories of underwriters’ reputation and underwriters’co-investment on IPO underpricing,the main assumptions of this paper are summarized and related models are established.Among them,the reputation of underwriters is scored by principal component analysis.Afterwards,an empirical analysis was carried out,using a total of 423 listed companies on the Science and Technology Innovation Board as a sample,and performing multiple regression analysis in Stata to verify the above assumptions.First,we examine the impact of underwriter co-investment on IPO underpricing,and then introduce underwriter reputation to establish the interaction item between underwriter co-investment and underwriter reputation,and verify the moderating effect of underwriter reputation in it.Finally,a robustness test is performed to test the robustness of the model.Finally,it is concluded that:(1)the ratio of co-investment and co-investment of underwriters is positively correlated with the IPO underpricing rate;(2)the influence of co-investment ratio on IPO underpricing is relatively weak among underwriters with high reputation.And based on the conclusions,suggestions are put forward.It is suggested to set a more flexible ratio of underwriters to follow-up investment,establish a reward and punishment mechanism for underwriters,and optimize the underwriters scoring and ranking system.