Abstract:Although IPO underpricing is widespread in the global capital market, the IPO underpricing rate of China’s Growth Enterprise Market is relatively high compared with the mature capital markets of developed countries, which is not conducive to the improvement of the efficiency of capital allocation and the healthy development of the capital market. IPO underpricing is an adverse selection behavior caused by information asymmetry under the “commissioned-agent” relationship. The involvement of venture capital can not only reduce the degree of information asymmetry between issuers and underwriters through the “information advantage” of venture capital institutions, but also reduce the degree of information asymmetry between issuers and investors through “authentication”. In this way, the company’s IPO underpricing rate can be reduced. Joint venture capital is the collective behavior of multiple venture capital institutions, which can strengthen the “information advantage” and “certification role” of an individual venture capital institution, and can reduce the IPO underpricing rate more effectively. However, if the difference in the shareholding ratios of investment institutions in joint venture capital is too large, it will weaken the positive effect of “followers” and even the “free ride” behavior will occur, which may weaken the inhibition effect of joint venture investment on IPO underpricing rate. An analysis based on a sample of China’s GEM listed companies from 2009 to 2019 found that: venture capital intervention can significantly reduce the company’s IPO underpricing rate; the IPO underpricing rate of the companies with joint venture investment is lower than that of the companies with individual venture investment; the reduction of the difference in the shareholding ratio of various investment institutions in the joint venture capital is conducive to the reduction of the company’s IPO underpricing. In addition, companies with joint venture investment intervention have higher governance levels and return on assets than those with individual venture investment intervention, so they can reduce IPO underpricing rate more effectively. It is necessary to strengthen the supervision of the capital market, reduce the degree of information asymmetry, reduce and avoid the adverse selection behavior of underwriters and venture capital institutions. Start-up companies should choose joint venture capital as much as possible to conduct IPOs, and rationally choose venture capital institutions that are compatible with their development. Meanwhile, they should strive to improve their management level, reputation and market resource allocation ability, so as to effectively reduce IPO underpricing rate and promote high-quality development of the capital market.