The Impact of Investor Sentiment on IPO Price Suppression: Based on Empirical Analysis of ChiNext Sub-sectors

Abstract

Since its establishment, China's stock market has had the characteristics of high IPO price suppression rate and investor investment sentiment, and since the prospect theory was proposed, investor sentiment has been considered to be an important factor affecting IPO price suppression. In this paper, a sample of 782 ChiNext IPO stocks from October 29, 2009 to December 31, 2020 is selected and the multiple regression model is used to empirically study the impact of investor sentiment on IPO price suppression. The empirical results show that market sentiment and individual stock sentiment have a significant positive impact on IPO price suppression. Further research found that in the sub-industry sample, the market sentiment was no longer significant, and the sentiment of individual stocks was still significant, while in the ChiNext non-manufacturing industry, the higher the market sentiment, the smaller the impact of individual stock sentiment on the IPO price suppression rate. Based on the research results, this paper puts forward relevant suggestions on the reform of information disclosure system, issuance mechanism and investor decision-making.