Research on the Impact of Irrational Investor Behavior on IPO Underpricing in Main-board, SME Board and gem: Based on Behavioral Finance Perspective

Abstract

This paper analyzes the phenomenon of IPO underpricing from the perspective of behavioral finance, and examines the effects of the irrational behavior of investors on the IPO underpricing of China's stock market by selecting the IPO underpricing rate, the first day turnover rate, the opening price rate and the lottery rate and so on. The study found that the investor sentiment in the three markets has a significant impact on the IPO underpricing, in which the investor sentiment in the continuous trading stage of the SME board and the gem has more strong influence on IPO underpricing. At the same time, this paper compares the difference between the Main-board, the SME board and the gem on the underpricing rate of IPO. Among them, the raising scale of the SME board and the gem has a significant negative impact on the IPO underpricing. Finally, combining with the reality of IPO underpricing in China's stock market, the paper puts forward some countermeasures and suggestions in order to weaken the problem of underpricing and promote the healthy development of China's securities market.