Research On The Pricing Efficiency For Initial Public Offerings In China

Improving efficiency of issue market of our country and marketization degree and reaching the rational distribution of the capital are the directions of reform and development of issue market of our country all the time. Issuing pricing of the new stock is the important link of the new issued stock, the research of various countries shows that the underpricing of the new stock is prevalent. The underpricing of initial public offerings of China which is the new developing market is more surprising, The purpose of my paper is to describe the underpricing question of A stock market's first public publication of our country in recent years objectively and to study pricing efficiency of IPO of different issuing mechanism through the way combined with empirical and theory studies.Based on the comparative study carried on the existing typical issuing mechanism, the paper made investigation to the market-based reform course of Chinese new stock issue. The empirical studies chose 238 new issuing stocks on A stock market of our country ranging from 2002 to 2004 as sample and established a linear regression. The studies proved two points. First, Turnover, LNSize and PE have the significant effects on underpricing of IPO;Second, the bookbuilding improves IPO pricing efficiency to some extent, but is not statistically significant. So, under the environment of administrative control of the p/e ratio, the change of the issuing mechanism is unable to really improve IPO efficiency. If the regulator attempts to improve IPO efficiency through the market-based reform of the issuing mechanism, canceling the administrative control on p/e ratio is an essential condition. Then this paper analyzed Chinese latest market-based issuing mechanism-bookbuilding and pointed out that bookbuilding of our country is different from the totally market-based bookbuilding. In the end, the paper gave suggestions on improving IPO efficiency of Chinese stock market.