Investor Sentiment, Venture Capital, R&D Investment, and IPO Underpricing: An Empirical Analysis of Chinese Star Market

Abstract

The Shanghai Science and Technology Innovation Board (STAR) led the Chinese capital market revolution with a registration system and showed a high Initial Public Offering (IPO) underpricing rate. This study investigates the impact of the research & development ratio, venture capital, and investor sentiment, on the IPO underpricing rate. The study utilizes STAR data from July 2019 to Dec 2022 listing 457 companies and employing the Ordinary Least Squares (OLS) model to conduct the analysis. The results indicate that venture capital and investor sentiment are positively related to IPO underpricing, while R&D investment negatively influences IPO underpricing. The examination of the determinants shaping IPO underpricing within the Chinese STAR market constitutes a valuable endeavor that facilitates a comprehensive and methodical comprehension of this specific facet of the capital market.