Interests Analysis of IPO for China's Listed Small and Medium Companies

This article analyzed IPO data of China's 561 companies in SME board and 186 companies in GEM board, and claimed that the new IPO system implemented in June 2009 provided opportunity for high-priced, high price-earnings ratio IPO. Underwriters and the former major shareholders became the beneficiaries and the largest driving force because of their profit-driven behavior. In the current external environment, to implement market-oriented IPO pricing system, we must address two key questions: (1) the inefficiency or weak-form efficiency of secondary stock market, and (2) irrational quote tendency of institutional investors who involved in inquiry.