Study On IPO Pricing Theory And Practice

The stock issue market is an important part of stock market, as it is the fundamental part of stock market. The procession of the determination of IPO price not only reflects the efficiency of market, but also is the basis of effective operation and the promotion of efficiency of the market. The stock market of our country develops quickly , however there are all kinds of disadvantages of its pricing method and mechanism, this leads to a low efficiency of the market. On one hand , there is a serious problem of IPO underpricing; at the other hand, the relations of investors, issuers and advisors have been in an unusual situation, the price of IPO stock can not reflects the true value of the stock, and these make the market can not realize the function of allocating the resources.The pricing of IPO stock is the key question to an investment bank, it is publicly reviewed as a difficult question as it is not only a theoretical question but also a practical question. From the perspective of theory, there are a lot of theories and models to describe the question, from the perspective of practice , the situation of market circumstances varies largely among different countries. From the perspective of our country's practice, we have used planned PE pricing model for a long time , with the reform of our IPO stock's pricing mechanism, the method to determine the prices of IPO stock's price have not been restricted to the PE model, and the mechanism to the discovery of market price has been in use. During the procession, study the pricing theory accepted internationally systematically and select effective pricing method according to the situation of our market have a great meaning.This article studies the pricing theories and models systematically , through the study we suggest that FCFE model should been given a great emphasis to promote our advisors' key capability , and what's more , we give some suggestions to the reform of our stock market.