The Impact of IPO on the Secondary Stock Market—An Empirical Research

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.