Ipo Pricing Model And Applied Research

Because of immature development of the securities market, the scientific and normative of Chinese stock pricing of Initial Public Offerings (IPO)is far inferior than foreign markets. Objective circumstances limiting, the current IPO pricing models such as cash flow discounting model, analog valuation model, the option pricing model as well as multiple factor pricing model was also less feasible applied in Chinese securities market. For years, China's IPO pricing has been using price/earnings ratio method of analog valuation model with strong administration color, resulting in the furious low IPO pricing phenomenon for a long time. Therefore, the systematic study of existing theories and methods of IPO pricing, the scientific understanding of the inherent law of the stock pricing behavior to explore a suitable IPO pricing model with the National Conditions, is a problem which needs further study and resolution quickly in both theory and practice.This article firstly use two IPO pricing which are the intrinsic value of the basic theory on capital asset pricing theory and the theory of systematic research, meanwhile quoting a classic merchandise which is the law of value "commodity prices are from the intrinsic value of commodity supply and demand determined", leading the internal and external factors that the two main lines called the design of the intrinsic value model and the external value model. One of them is intrinsic value model based on the intrinsic value of the theoretical formula derived from the intrinsic value of the impact of factors; the other is the usage of multivariate regression model design, carrying out in the value model reflected in the stock supply and demand situation of post-earnings ratio formula which is derived from innovation. Finally, the paper will use the objectivity of a strong principle about entropy method to determine its intrinsic value and extrinsic value of their respective weight coefficient, and then build a model of IPO pricing which is designed to smooth the difference coefficientγmeasured its accuracy to verify the validity of the model.To be cognitive, in order to verify its usefulness in practice, this article also use the built IPO pricing model prediction in 2007 of new stock issue of bank shares, and the prediction of the issue price and the actual issue price their departure from the market value margin compared the extent of analysis as well. We found better prediction results of the difference range of small, fitting highly. Moreover, the model with the existing valuation models, which is not only inherit their merits, but also to overcome their disadvantage, so as to China's listed enterprises reasonable IPO pricing provides a more reasonable method of valuation.