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The “Uneven Bars” Bids of Institutional Investors and IPO Pricing Mechanism
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TitleThe “Uneven Bars” Bids of Institutional Investors and IPO Pricing Mechanism  
AuthorLi Xindan, Li Dongxin, Yu Honghai and Zhu Weihua  
OrganizationSchool of Management and Engineering, Nanjing University; Shanghai Stock Exchange,,, 
Key WordsInstitutional Investors; “Uneven Bars” Phenomenon; IPO “Three-High” Problem; First-day Overvaluation; Long-term Returns 
AbstractThe bids from institutional investors are the core of the IPO pricing process and "Black Box" of the theoretical study. This article researches "Uneven Bars" phenomenon of IPO bids from institutional investors for the first time, and explains "Three-High" problem which means "High price, High price-earnings ratio, High financing capital" in the primary market and issues about the first-day overvaluation and long-term low returns in the secondary market. This research shows that the institutional investors own high differences of opinion and some high-bid behavior leads to the positive-bias pricing. The higher the degree of the "Uneven Bars" bids, that higher dispersion in the bids, the greater overvaluation in the primary market, resulting in the emergence of the "Three-High" problem. Our results suggest that diversity of opinions from institutional investors should be negatively related to IPO first-day returns, and this effect is long-standing and ultimately formatting "IPO Long-term Returns" phenomenon. This study has the great signification to understand the bidding behavior of the institutional investors, improve and reform of the IPO bidding and pricing mechanisms, and even to strengthen investors’ protection. 
Serial NumberWP370 
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