TITLE:
Research on Relationship between “Direct Investment + Sponsor” Mode and IPO Pricing Efficiency
AUTHORS:
Yuanzhi Chen, Qixin Wang
KEYWORDS:
Direct Investment + Sponsor Mode, IPO Pricing Efficiency, Interest Conflict
JOURNAL NAME:
Modern Economy,
Vol.9 No.2,
February
11,
2018
ABSTRACT: The paper takes 996 IPO companies in China from 2012
to 2016 as samples and investigates the effect on IPO pricing efficiency under
the “Direct
Investment + Sponsor” Mode. The research shows
that there is no significant difference
between companies that intend to IPO under the “Direct
Investment + Sponsor” mode and companies that
intend to IPO under the non-“Direct
Investment + Sponsor” mode in the discount of new
stocks and one-year returns. The result shows that the firewall mechanism
between the direct investment department and the investment banking department
of Chinese securities traders is in good condition, verifies the rationality of
not abolishing “Direct
Investment + Sponsor” mode in Guidelines for Direct Investment Business of
Securities Companies introduced by China Securities Regulatory Commission
in July 2011 and powerfully refutes the market’s long-lasting query that China Securities
Regulatory Commission retains “Direct
Investment + Sponsor” mode. Meanwhile, it
provides evidence for the existence compliance of “Direct Investment + Sponsor” mode with financial innovation made by securities traders on the
occasion of introducing new policies such as Management Standards for Private Equity Subsidiaries of Securities
Companies and Management Standard for
Alternative Investment Subsidiaries of Securities Companies.