Venture Capital and First-Month IPO Underpricing Rate: An Empirical Study Based on the Up and Down Limits of China GEM

Xuwei Jiang ()
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Xuwei Jiang: Shanghai University of International Business and Economics, Finance Management School

A chapter in Proceedings of the 2023 International Conference on Finance, Trade and Business Management (FTBM 2023), 2023, pp 271-278 from Springer

Abstract: Abstract Under the limit of upward and downward movement, the closing price of IPO on the first day often fails to reflect the real price of IPO companies, while VC can have an impact on the pricing of IPO companies by alleviating the asymmetry of market information; this paper, in the background of China's Growth Enterprise Market (GEM) upward and downward movement limit, conducts empirical research on venture capital and the first-month IPO underpricing rate, and uses the PSM to carry out a robustness test on the regression results, and the research shows that: 1) there is a significant negative correlation between the existence of VC in the GEM IPO firms and the first-month IPO underpricing rate; 2) venture capital syndication insignificantly increases the first-month IPO underpricing rate, and there exists a degree of grandstanding motivation to help companies go public more easily by reducing the IPO offering price, or from a market perspective, investors are more favourable to IPO companies where syndication exists, leading to a higher first-month IPO underpricing rate.

Keywords: venture capital; IPO underpricing; syndication; information asymmetry (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-298-9_30

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DOI: 10.2991/978-94-6463-298-9_30

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