Issuing New Shares Pricing Study

Initial Public Offerings are the capital action of listed corporations, which offer stock to public to satisfy themselves capital demand through security markets. Successful issuing can not only raise funds for the enterprise, but also contribute to improve the proportion of ownership retained by initial share holders, which take an important role in sustainable development . The IPO pricing is the most important core step in IPOs.The IPO price is reasonable or not is related not only with the vital interests of issuers, underwriters and investors, but also with the efficiency of resource allocation . The means of IPO issuing and pricing is generally determined by the major underwriter negotiating with the issuer according to the investor's need. And the needof the investor is the key factor of the IPO pricing.It is a major standard to determine if the IPO price is reasonable whether the IPO price is close to the expecting the secondary market price. Exploring from the practice of the international security market, the IPO underpricing phenomenon do exist. The IPO underpricing is concerned with several factors such as the Information Asymmetry etc. And it is very important for the construction of the market to decrease the IPO underpricing by perfecting the ways of the IPO issuing.The paper reviews the history of China IPO market, which includes the gross of issued stock, the regulation mechanism of stock issuing, the means of stock issuing and pricing, etc, and analyzed the present conditions and existing problems. Basing on the above, the paper dissects the systemic and non-systemic factors that influence China IPOs. The former include the policy premium caused by examining and approving systems, the policy shrink caused by irrational capital stock structure, policy underpricing of rigid IPO pricing method, etc. The non-systemic factors contain the asymmetric information between investors, issuers and investment bankers, the reputation of the underwriters, the proportion of ownership retained by initial shareholders, financial signals such as the capital structure of issuers, etc.Using the Chinese IPO samples, the paper tested empirically the relationship between the stock issuing method and IPO underpricing, the paper gets some significant conclusions.Basing on the theoretical and empirical analyses, the paper gives some important countermeasures and suggestions that build efficient IPO market of China from some aspects which are respectively the regulation system of IPO issuing, the method of IPO issuing and pricing, the development of investment bankers, and presents the stratagem about the reform of stock issuing regulation mechanism in China. According to the thought of making the method of IPO issuing and pricingmarketability, the paper puts forward a new method of IPO issuing, that is book building tender pricing.The article is divided into 7 parts, as the first part, retrospects the theories about the means of stock pricing, and address the question to be answered. The second part analyse the IPO principles and models in pricing. The third part which introduce the means of the IPO issuing , is a complement of the second part. The fourth part is to introduce the reasons of IPO underpricing. Then the fifth part and sixth part picture the historical and current status and developing process , and make up a model to account for the formative factor of IPO underpricing from administrative pricing to marketable pricing. A conclusion is put forward in the seventh part, as well as the suggestion on the design of regulation policy , is made up in the end.