Abstract:
The phenomenon of IPOs’ underpricing has been investigated of stock markets around the world. In this paper, I focus on 203 IPOs from 2009 to 2011 extracted from Shenzhen growth enterprise market. Underpricing is directly related to turnover ratio, initial P/E ratio, prior year’s ROE, subscribe multiple and free float. The study shows that the initial abnormal return on the secondary market is significantly positive. This study also finds that the initial return in the primary market is negatively related to the free float and IPO P/E ratio. And it is positively related to the prior year’s ROE, subscribe multiple and the turnover rate.