Research On The Efficiency Of IPOs Pricing In Stock Markets

Stock price is always the important subject of finance researching field. And thepricing is the key point in the process of Initial Public Offering. It is not only relatedto successful offering, but also to the efficiency of whole stock market. The initialreturns are generally too high, a universal phenomenon in the IPOs. Especially, in ourstock market, initial returns are frequently times than counterpoint of mature capitalmarket. The reason is that the gap between the initial price and the offering price isexcessively great. In other words, the stock is offered with a low price, called asunderpricing.Some researches have been made out to interpret underpricing in IPOs, such asthe Winner Curse Hypothesis, the Signaling Hypothesis, Information AsymmetryHypothesis, the Risk Avoidance Hypothesis, the Ownership Dispersion Hypothesis,and etc. Some inland researches have studied in this field based on the difference inour stock market. This paper goes did into the IPO pricing. We found that initialreturns are related to firm-special characteristics and market-special characteristics.Moreover, we find that the first date returns are worked on by complex factors.We defined the price update from the medium of initial price range to the firstdate startup price. Relations are found among the price update and public information.According to this result, we know that underwriters did not incorporate completeinformation into the initial price range. Through checked up the connections amongthe price update and different phase returns of IPOs, We suppose that underwritersmake certain the initial price at a former time. Based on above analysis we can saythat the pricing process is absent efficient.The first portion introduces the status of high initial returns and existinginterprets. The second portion recommends the offer methods. The third portionfocuses on the relation between initial returns and information learned before. Thefourth portion proves how the underwriters deal with the public information. The lastsummary chapter gives some results and suggestions.