Research on IPO Underpricing, Trading Volume and Investor Interest

With a sample of 245 IPOs of A shares issued listed on Chinese Stock Market during sample period between 2006.6 and 2008.6, the relationship between investor interest and IPOs underpricing are investigated by using the multivariate regression model. Several findings are obtained: the level of pre-issue investor interest is positively related to the initial return; IPOs with greater pre-issue investor interest experienced higher return during the first year of trading; the level of the long-term investor interest is positively related to the initial return. The regression results show that the variable of investor interest can explain the phenomenon of IPOs underpricing well in Chinese Stock Market.