This study examines the interactive effect of two fund-raising regulation policies on resource allocation in China's new stock issuance market. The findings show that the joint effect of regulations on fund usage and the amount of fund raised is likely to lead to fund insufficiency. This will cause financial constraints, and hence under-investment. Since 2009 when regulations on the amount of fund raised were loosened, firms' financial constraints have been eased. But excessive funds might trigger over-investment. Further analysis indicates that there is an inverse U-shaped relationship between the amount of excessive fund a firm holds and its long-term performance. These conclusions can provide references for policy making and system design of the coming IPO register system.