A Study On IPO Valuation And Under-pricing Of GEM In China

After the policy of opening-up and reform, the small and medium-size companies develop fast in China. The small and medium-size companies have become an important part of China's technology and mechanism innovation and also an important strength of improving China's economic growth. However, the rapid development of the small and medium-size companies also face the problem of financing. In the context of China's promoting economic development transformation and upgrading industrial structure, speeding up the construction of the Growth Enterprise Market, supporting the company's independent innovation, promoting economic restructuring and implementing the national strategy of independent innovation is of great significance.After a decade of struggling, China's Nasdaq-Growth Enterprise Market on October 30,2009 was officially launched at the Shenzhen Stock Exchange. Although after more than 20 years development, China's capital markets have achieved huge progress, China's capital markets is not yet mature, related mechanisms and system need to be further improved. In terms of Growth Enterprise Market in China, the phenomenon of "three high-issue" is ordinary existing in the primary market, that is high issue price, high price-earning ratio and high ultra-raised funds, while in secondary market, the phenomenon of IPO under-pricing is also serious. So, the research on the IPO pricing and under-pricing in Growth Enterprise Market in China is of vital theoretical and applicable importance of improving the Growth Enterprise Market System, upgrading the efficiency of the small and medium-size companies' financing and promoting the upgrading of the industrial structure.This thesis mainly includes the following aspects. Firstly, on the basis of analyzing the theory of the IPO pricing and under-pricing, we initially construct the framework of IPO pricing and under-pricing on China's Growth Enterprise Market. Secondly, we focus on the general pricing model, and depending on the proposed life expectancy of the industry, the characteristics of the industry of the listed companies of China's Growth Enterprise Market, we propose the appropriate China's Growth Enterprise Market pricing model. Finally, considering the present condition of China's Growth Enterprise Market, we adopt the factor analysis and multiple regression to analyse the issue of IPO pricing on China's Growth Enterprise Market. The research results show that IPO pricing on China's Growth Enterprise Market is reasonable to some degree. Through the analysis of the mechanism of the IPO pricing on China's Growth Enterprise Market, we do not verify the existence of sharply lower pricing behavior on the issue price indirectly. The main reason for the sharply IPO under-pricing on China's Growth Enterprise Market lies in the excessive speculation on the secondary market.