Institutional Investor Cliques and IPO Underpricing under the Registration-Based IPO System

Xiaodong Gan; Xiaoyu Zheng

doi:10.2991/978-94-6239-787-3_46

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Institutional Investor Cliques and IPO Underpricing under the Registration-Based IPO System

Authors

Xiaodong Gan¹, Xiaoyu Zheng¹^{, *}

¹International Business School, Hainan University, Haikou, 570228, China

^*Corresponding author. Email: zhengxy@hainanu.edu.cn

Corresponding Author

Xiaoyu Zheng

Available Online 29 September 2026.

DOI: 10.2991/978-94-6239-787-3_46 How to use a DOI?
Keywords: Institutional Investor Cliques; Registration-Based IPO Reform; IPO Underpricing
Abstract: The high-price elimination mechanism under the registration-based IPO system facilitates quote clustering by institutional investors, which may impair IPO pricing efficiency. Using a sample of firms listed on China’s STAR Market from July 2019 to June 2022, this study examines the relationship between institutional investor cliques and IPO pricing efficiency. We find that institutional investor cliques significantly increase underpricing and reduce IPO pricing efficiency. Channel tests show that both informed and uninformed institutions jointly subscribe to undervalued stocks, thereby lowering the lottery ratio and increasing underpricing, which provides empirical support for the “winner's curse” hypothesis. The effect is more pronounced in non-state-owned enterprises and firms with a high strategic placement ratio. This study explains the high underpricing on the STAR Market from the perspective of institutional cliques and offers practical implications for improving IPO pricing rules and enhancing resource allocation efficiency in the primary market.
Copyright: © 2026 The Author(s)
Open Access: Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title: Proceedings of the 2026 4th International Conference on Management Innovation and Economy Development (MIED 2026)
Series: Advances in Economics, Business and Management Research
Publication Date: 29 September 2026
ISBN: 978-94-6239-787-3
ISSN: 2352-5428
DOI: 10.2991/978-94-6239-787-3_46 How to use a DOI?
Open Access: Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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ris enw bib

TY  - CONF
AU  - Xiaodong Gan
AU  - Xiaoyu Zheng
PY  - 2026
DA  - 2026/09/29
TI  - Institutional Investor Cliques and IPO Underpricing under the Registration-Based IPO System
BT  - Proceedings of the 2026 4th International Conference on Management Innovation and Economy Development (MIED 2026)
PB  - Atlantis Press
SP  - 469
EP  - 478
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-787-3_46
DO  - 10.2991/978-94-6239-787-3_46
ID  - Gan2026
ER  -

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