Research Of IPO Pricing Efficiency Of GEM In China

October30,2009, after a decade of carefully prepared, GEM in China finally opened in the Shenzhen Stock Exchange. The establishment of the Growth Enterprise Market (GEM) is of great significance to improve capital market and promote the development of new industries. However, with the increasing number of Chinese companies listed on GEM, GEM shows low pricing efficiency.In order to solve the problem of the low pricing efficiency of GEM and to promote the healthy development of GEM, Firstly, the author first reviewed and evaluated the efficiency of IPO pricing conditions at home and abroad. And then, analyze the GEM. On the basis of combination of GEM market characteristics and the research of scholars. The author propose to analyze the IPO pricing efficiency from two aspects:one is the relationship between the issue price and the company internal financial factors. The other is the impact factors of IPO underpricing. And then, the author use the sample of311companies which listed on GEM in China from October30,2009to April30,2012, and using empirical research methods to establish a multiple linear regression model and give an empirical test of the factors that affect market pricing efficiency in the GEM. It hopes to find the factors which affect GEM pricing efficiency.The empirical test results show that there is no significant correlation between issue price of new shares and financial indicators which reflect the company’s intrinsic value. IPO underpricing rate is an important indicator reflecting the pricing efficiency, after a empirical analysis to the GEM IPO underpricing, the author found that:the first day of the turnover, the earnings release, the success rate, the total funding, Principal component variables that reflect the company’s profitability, Principal component variables reflect the company’s development prospects as well as on the first day of the Shanghai Composite Index rose are the important factors which affect the IPO underpricing of GEM. On the basis of the analysis of IPO underpricing in GEM, the author consider that the wrong investment concept of GEM investors, the shortage of market shares of GEM conditions and the deficiencies of the IPO system are the main factors which affect the low pricing efficiency of GEM in China. After found the reasons which affected the low pricing efficiency of GEM, the author provided the corresponding countermeasures and suggestions to solve the problem of pricing efficiency of the GEM in China.