In this study of IPO, we develop new theoretical models based on reputation theory for investigating two puzzles: underpricing in the IPO market and long-term underperformance in the secondary market. For the empirical tests, we develop test hypotheses for SBC regarding the IPO puzzles, according to Jenkinson and Ljungqvist (2001), caused by institutional explanation, asymmetric information, or control and ownership, all of which are rational models. We also try to explain the IPO underpricing phenomena, including information asymmetry and signaling models and the “winners curse” in the model with informed underwriters obtain when they are rewarded with the most underpriced IPOs. Uninformed underwriters lose since they don't know which issues will be underpriced, so they are given a large percentage of overpriced shares. We also provide the test results from empirical tests with Chinese IPO market data.​

Key Words : Reputation, IPO Firm, Competition, Maximization, Herding, Game Model