The Determinants of IPOs Underpricing: Evidence from The Internet Industry on Chinese Stock

Abstract

Considering the rapid development of the Chinese Internet economy in the twenty-first century, this study empirically investigates the determinants of China's IPOs underpricing on the Internet industry by analyzing the sample of 63 listed companies in Shanghai and Shenzhen stock exchanges. The regression results show that two factors, the issuing price of IPOs and stock retained earnings rate, have a significant impact on the IPOs underpricing rate of the Internet company. The result of robustness checks suggests the same results that the issuing price of IPOs and stock retained earnings rate are two determinants mainly driven the IPOs underpricing rate of the Internet company. This study explores several underlying theories of IPOs underpricing and provides scholars with a new outlook to understand IPOs underpricing theories.