The Impact of Registration System Reform on the Growth Enterprise Market IPO Underpricing Rate

The Science and Technology Innovation Board (STAR Market) of the Shanghai Stock Exchange, founded in November 2018, has announced the commencement of a trial registration system. Introducing the registration system to facilitate the issuance of new shares is a crucial step towards enhancing the reform of China's capital market and its core institutions, representing a significant milestone. This study utilizes data from the primary stock exchanges and Growth Enterprise Markets in Beijing, Shanghai, and Shenzhen from 2018 to 2021. It employs the Difference-in-Differences (DID) model to empirically examine the effect of the registration system reform on the initial public offering (IPO) underpricing rate of the Growth Enterprise Market. The research findings indicate that implementing the registration system reform for the Growth Enterprise Market has led to an increase in the rate of IPO underpricing. An augmentation in return on total assets fosters a rise in the IPO underpricing rate, however, an escalation in issuance costs does not facilitate an increase in the IPO underpricing rate.