Empirical Analysis on Effects of Share Retention and Lockup on IPO Underpricing

In this paper, with the data of the 226 companies listed on Shanghai security exchange and Shenzhen security exchange during sample period between January 2006 and September 2008, the effects of company owner's retention and lockup on underpricing are investigated by using the multivariate regression model. The regression results show that the share retention and lockup ratio is positively correlated to IPO underpricing in Shanghai stock market, but in Shenzhen stock market these two factors negatively affect on IPO underpricing; The results of the regression of lockup period show that, whether in Shanghai or Shenzhen stock market, the lockup period is not related to the underpricing significantly.