Study On The Effect Of Corporate Governance On IPO Pricing

The issuer can make a convincing promise of investment income to external investors by strong corporate governance structures at the time of the IPO. It makes us realize corporate governance to play an important role in IPO pricing. Based on the thought , this paper studies theoretic relationship between corporate governance variables and IPO pricing. A lot of scholars analyzed factors influencing IPO pricing. However,only a few scholars studied on the effect of corporate governance on IPO pricing heretofore. The study will help us realize the role of corporate governance in IPO pricing and make corporation directorate pay more attention to corporate governance. It is great significant to healthy development of Chinese stock market. From the point of view of the balance of stakeholders'interests, this paper studies IPO pricing and built a model of IPO pricing to describe stakeholders'claims for maximum benefits. Based on the model,investors can work out IPO pricing on the balance of stakeholders'interests. The model shows that IPO pricing will be not only related with the value of the firm, but also related with monitoring,directorate reputation ,incentive measures and other corporate governance variables. The conclusion establishes theoretical base for analyzing the effect of corporate governance on IPO pricing. Finally,this paper analyses the effect of corporate governance on IPO pricing by demonstration.