Research On IPO Pricing In Current Chinese Growth Enterprises Market

IPO high underpricing phenomenon has been plagued regulators and academia focus during the development of China capital market in past20years. There are three major hazards of stock issue high underpricing on capital market:Firstly, the purchase of new shares to be risk-free investment, the massive funds backlog in the primary market, is not conducive to the flow of capital, resulting in a waste of resources; Secondly, as long as the company listed success can obtain needed capital, and under current approval system, it does not appear in the issue failure phenomenon, the company strategic focus is how to enhance the intrinsic value of the company, and to be listed on the company’s development as soon as possible to rent, which have the order reversed. Thirdly, after the issuance of new shares, market speculation strong emotions with the stock price volatility, which not conducive to long-term stable development of the capital market.October23,2009China Growth Enterprises Market officially launched, the first batch of28companies listed average underpricing rate high amounts to106.23%, thereafter the GEM listed companies to issue day rarely break, high underpricing phenomenon unabated, purchase of new shares are regarded as do poineering work board the risk free investment. GEM IPO market as SMEs financing platform, is to breed with the development potential of high-tech companies and the establishment of new shares, huge amounts of money speculation, to the small and medium-sized enterprise long-term stability development of adverse effects. Hence, we need to analyze the reasons behind the phenomenon of GEM high IPO underpricing, finding out the key influencing factors and making policy of form a complete set, perfecting GEM IPO market pricing mechanism, which contributing related suggestions to different market participants.This paper first introduces the current domestic and foreign IPO pricing theory, the latest research results were literature review. For the stock IPO underpricing research, foreign scholars began earlier and formed more theories with perfecting system, but our country scholars originality theory less, basically in selection of the Shanghai and Shenzhen A shares based on relevant data, the empirical analysis of foreign IPO underpricing the correctness of the theory as well as on China capital market applicability. Because our country does poineering work board the IPO market has just started, the sample data are limited, the GEM of the high IPO underpricing of little, did not form unified research system, therefore, this paper studies on this phenomenon played a complementary role.Do poineering work board the market participants to be listed company stock valuation is reasonable or not, directly affect the shares after the listing price trend, therefore, China needs to do poineering work board of IPO market in the main stock valuation model, and do the analysis on the current GEM IPO pricing. Different market participants to the GEM listed companies have different valuation models:the issuer will generally use the discount model of their stock valuation; underwriter generally use the asset pricing models, and according to the current market situation, the reference pricing models to estimate the stock value of the multiplier; investors will generally refer to the market of similar industry or similar enterprise index, apply multiplier model valuation.The GEM market mainly uses the IPO inquiry pricing methods, significantly improved compared to to the market level and before the reform, but hares the high IPO underpricing without essential change shows that the GEM pricing mechanisms, there is room for improvement.In the domestic and foreign IPO pricing theory and IPO stock pricing models are summarized on the basis of the analysis, this paper simply introduces the second board market in China the development course and the present situation, the paper summarizes the GEM IPO system in three aspects, namely, the issuer qualification approval procedures and information disclosure. Through to our country does poineering work board the IPO sample data of empirical research, the empirical conclusion:Chinese GEM IPO underpricing phenomenon and the market environment is relatively independent, underpricing rate exhibited a "heavy stock market, the statistical characteristics of light"; The current mainstream theory, effects of IPO underpricing core factors can be grouped into five main factors, namely the initial pricing, issue size, the value of stock market speculation, mood and shareholder concentration; The new sample data to set up a multiple regression model showed that, diluted earnings release, issued prior to the net assets per share, issued after the top ten shareholders, the number of issued shares and percentage of shareholdings of listed on the first day of exchange rate is the GEM IPO underpricing rate is the key factor, which the former three and underpricing rate negative correlation after a positive correlation between the two.Combining with the empirical conclusion, in view of the current GEM IPO pricing mechanism of the problem, this paper finally puts forward the applicable to different market participants, policy recommendations:For regulators, should reduce the GEM access threshold, the timely introduction of various industries listed standard, make do poineering work board level of market supply and demand balance, promote underpricing rate gradually decreased; for the issuer, shall introduce risk investment, improve the net assets per share, reduce the share proportion, the project for the company the proper financing; for the recommendation institution, should increase the information transparency, improve the quality, to establish their own brand; for investors, should be rational investment and the value of the investment, learning the necessary professional knowledge, control investment risk, not blind to participate in the GEM market of IPO of new speculation.