An Analysis Of Cost Factors Of The IPO Decision Of China's Private Enterprises

Along with the development of the capital market and the fast growth of the private economy, the issue of the private enterprises' IPO is more and more concerned. After drawing lessons from the model developed by Battacharya and Ravikumar(1999) of concerning the capital market mature degree and the private(household) enterprises' sell decision, we developed a model about the cost and private enterprises' IPO decision, we mainly investigated the cost factors the private enterprises must face in their IPO processes and it's influences to the decision of these enterprises. Firstly, we analyzed the direct cost and IPO transformation cost of these enterprises, then we carried on setting up a model to the relation of the civil finance and the private enterprises' capital rising efficiency, we also took Zhejiang as an case to investigate the civil finance and it's influence to the enterprises' IPO decision, Then, we chose a big sample data to carry on an experience analysis of the private enterprises' IPO underpricing and the cost of buying shells to describe the other cost of private enterprises' IPO. The conclusion of our model is: The critical capital scale of the private enterprises' IPO choice is positively relative to the unit capital cost of IPO, that is to say, a higher cost of IPO relates to a bigger critical capital scale of IPO. The substantial evidence investigation and analytical conclusion are clear furthermore: The high IPO transformation cost and IPOs underpricing cost is an important reason of the private enterprises "don't wish to appear on market", furthermore, in the regions in which the civil finance is activity, the opportunity cost of the enterprises' IPO is more higher, thus weakens the private enterprises' motive to go IPO further.