An empirical study of full-circulating stock's IPO underpricing in China's A-share market

摘要

In China, IPO underpricing phenomena attracts more and more attentions. This paper constructs a structural system of equations and uses the instrumental-variables method to analyze IPO underpricing of the full-circulating stocks. Our empirical findings that those IPO underpricing and initial turnovers are negatively correlated support the hypothesis of speculative bubbles. The IPO underpricing is negatively correlated with earnings per share (EPS), and positively correlated with price-earning (PE) ratio, which suggests some irrationality of A-share market investors.