TITLE:
The Impact of IPO on the Secondary Stock Market—An Empirical Research
AUTHORS:
Xiaole Li, Xuhui Shi
KEYWORDS:
IPOs, The Secondary Stock Market, Linear Regression
JOURNAL NAME:
Modern Economy,
Vol.7 No.3,
March
23,
2016
ABSTRACT: The IPO market can achieve financing function of the stock market after
the IPO listed companies enter the securities market circulation. The IPO
market and the secondary stock market complement each other and there is a
strong relationship between them. In the study of the impact of the secondary
stock market for the IPO market, based on supply and demand theory, the stock
market expansion is a bad news which will lead to huge financing unilateral
fall. This article mainly studies the impact of IPO on the secondary stock market.
On the basis of theoretical analysis, we use linear regression model based on
least-square method to explore the relationship between them, and confirm that
the IPO issues have negative impact on the stock market retunes. When the external
factors in the model and controlling factor within the model maintain
equilibrium, the changes of the stock market rate of return caused by IPO
financing are very significant. Stock market returns of IPO financing have
considerable flexibility. At the end of the paper, some suggestions are put
forward to strengthen the construction of the issuer integrity, the exit
mechanism of listed companies and strengthen the supervision of matter and
afterwards.