Initial Public Offerings Pricing Research

Various countries' scholars pay attention to the IPO pricing. The IPO pricing efficiency may use the IPO underpricing rate to carry on the quantification. The IPO underpricing refers to the wholesale price on the new stock primary market to be lower than the market price on secondary market, which displaying that the first day closing price for the new stock on the market release to be higher than the wholesale price obviously, and on the market the first day to be able to obtain the remarkable superior earnings. The overseas massive empirical study indicated that IPO underpricing in each national exist universally, but the degree of underpricing and the reason for underpricing are different.In the IPO entire link, the IPO pricing is the most core question. It is very important, because whether the IPO pricing is reasonable is based on whether the market price reflects the company's value. There are two most fundamental factors: first is estimate method of IPO value; second is way of offering pricing.The estimate method of IPO value may divide into five kinds approximately: Based on the property estimate value method, the current value estimate method, comparable firms approach, the real options estimate approach and the economical added value approach. Each approach has its own aspect. Underwriter chooses the appropriate approach in terms of different company.The ways of offer pricing mainly contain Book building, price bid, fixed price etc. Book building is one of the most common methods currently being used in the world. It is gives play to the function of the market to the maximum extent under protecting the basis prerequisite of investor's right and interests.Through the multiple regression analysis of factors of IPO pricing efficiency in China's stock market, this paper reveals that there is no remarkable difference of IPO pricing efficiency between fixed price per earning and book building. The inquiry system has not obtained the expectation the effect, that is to say Book building has not played the improvement role to resources deployment efficiency on the stock market.The logic way of this paper is that, this paper firstly summarizes the former researches of the reasons of IPO underpricing, then describes several approaches of valuing IPOs, ways of offering pricing and their pros and cons. Furthermore, through the empirical research of China's stock market, this paper reveals that the major factors that effect IPO pricing efficiency of China's stock market. Finally, this paper puts up with some advices.