A Study Of Theory Of IPOs Pricing

There exist many influential factors in the process of IPOs pricing, include the account value of the company, operation performance, characteristics of industry, the quantity of IPOs and the fluctuation of stock market etc. According to the different IPOs pricing method, the determination and quantification process of these influential factors appears the great difference.Currently, there have many IPOs pricing methods across the world. In this article it mainly introduces four kinds of pricing model, including Income Discount Model, Compare Company Analysis Method, Option Pricing Model and Many Factors Pricing Model. It elaborates the application scope, characteristics and shortage of every model in this article respectively.In the study of theory of IPOs pricing, another important aspect is the interpretation to the phenomenon of under-pricing of newly issued stock. This thesis describes the phenomenon of IPOs under-pricing all over the world, especially in China's stock market. In addition, the article puts forward various theory models to explain the phenomenon of IPOs under-pricing, including Adverse Selection Model, Signaling Model, Principal-Agent Model, Winner's Curse Hypotheses, the Bandwagon Hypothesis, the Dynamic Information Acquisition Hypothesis, Market Feedback Hypothesis, Lawsuit Avoidance Hypothesis, Equity Dispersion Hypothesis, Stock Price Stable Hypothesis and Speculative Bubbles Hypothesis etc.On this foundation, the article further describes the phenomenon of IPOs under-pricing and IPOs pricing method in our country. Analyze applicability of series evaluation model in our stock market and try to interpret the phenomenon of IPOs under-pricing in our country by west under-pricing theory. But these theories can't explain the high under-pricing degree in our stock market properly, because of the special market structure of our stock market. Therefore, the article empirically investigates the performance of Chinese initial public offering (IPO). The data usedcover the period from Jan.2003 to Mar.2005 with the samples including 128 companies(only in the Shanghai A-share markets). In the paper a statistical model is developed to analyze the premium between the first day closing price and the offer price. It concludes that the volume of circulating common stocks, the earnings per share, the turnover ratio and the winner's ratio can partly interpret the phenomenon of under-pricing of newly issued stock in our stock market.At the end of the article, it puts forward solutions to our stock market, including change the special equity structure, establish marketing operation mechanism, information disclosure mechanism and short sale mechanism etc.Of course, there still have many shortages in this paper. Consequently, further discussion will be called for.