The Studay Of Issuance System And Issuance Ways With IPO Pricing Efficiency In China

A series of reforming on the issuance system and issuance ways of stocks have been taken on in China, aiming at improving the IPO issuing marketing and pricing efficiency, which will undoubtedly affect the pricing efficiency of IPO. So this paper studies the IPO pricing efficiency in respect of issuance system and issuance ways. Researches on IPO pricing efficiency focus mainly on testing the rationality of pricing new stocks. There are two kinds of standard to test the pricing efficiency of IPO in China. One is the relative efficiency standard, that is, proper price for the new stocks can not only fully reflect all the present internal factors of the issuing corporation, but also mirror all the exterior factors the firm is facing; the other standard is absolute efficiency one, i.e. the price is close to the first-day closing price which indicate the new stock's value, and the closer they are, the more efficient the IPO pricing is.First of all, this paper summarizes the IPO pricing efficiency theory and empirical study at home and abroad. And then it reviews the changes of China's stock issuance system and analyzes the characters of examined system and approved system. By relative efficiency criterion, based on the IPO data from Shanghai and Shenzhen stock markets during the years 1995~1999 and 2001~2005, it builds the econometric model and empirically compares the differences in IPO pricing efficiency under the examined system and approved system, aiming at determining how the reforms in issuance system affect the IPO pricing efficiency. Secondly, the change in the IPO issuing way and the course of marketing are studied. Based on the IPO data from Shanghai and Shenzhen market during the years 1999~2007, by absolute efficiency standard it statistically analyses the relationship between two marketing reforms of IPO issuing way and IPO pricing efficiency, then empirically ascertain the influence that the reforms have on IPO pricing efficiency.The paper concludes as follow: firstly, the IPO price under the examined system can only reflects the firm's ability of profit and debt-paying and supply-demand condition at the secondary market, which shows the limit of IPO pricing efficiency. Meanwhile under the approved system the issuing price not only mirrors the above elements of IPO pricing, but also shows the scale of issuing firm, the potential growing ability as well as its issuance way, which illustrates the IPO pricing efficiency increasing to be more reasonable. Secondly, the first marketing reform didn't increase but reduce the IPO pricing efficiency; the second reform is somehow effective, and the IPO inquiry issuing finds the correct direction. At last the paper gives some suggestions on how to run a standard primary market and how to increase the IPO pricing efficiency.