IPO Pricing Model Research Of Growth Enterprises Market In China Based On BP Neural Network

With the development of domestic and international financial industry, the GrowthEnterprises Market (GEM) in China launched in Shenzhen Stock Exchange Market inSeptember,2009, China’s securities market is a themulti-level capital market with theimportant formation of motherboard, small plates and the GEM.The launch of the GEMmarket in China,on the one hand to meet the financing needs in the rapid development ofsmall and medium sized enterprises, on the other hand to make social scattered funds willbe gathered in capital market, and promote the optimal allocation of capital. But the GEM isstill an immature and emerging market,whose IPO pricing mechanism is not perfect,causedmore IPO underpricing phenomenon than the motherboard market.Therefore, the study ofIPO pricing issues within Chinese GEM companies in order to improve the efficiency of IPOpricing, have a strong theoretical and practical significance to improve the GEM system,enhance the efficiency of SME financing, and ameliorate the operating environment ofChinese capital markets.GEM IPO is the behavior of initial public Offering and list for trade in exchange-trademarket of small and medium sized enterprises with high growth.As the main companiesListing in GEM with the innovation in industry and business, it is difficult to find in the samekind companies to compare,at the same time,the short operating time and stay at an earlystage make less historical operating data and hart to accurately measure future development.Traditional methods such as free cash flow discounted,relative valuation and the economicadded valuation techniques are no longer applicable to the GEM IPO pricing.Many scholarsfrom a new research perspective of the real options method and neural network. Based on thedynamic complexity of the GEM IPO pricing,this paper goes through the analysis of theprinciple and algorithm of BP neural network to try to resolve the nonlinear and dynamicmathematical problems of the GEM IPO pricing,in order to show the importance of GEMIPO reasonable pricing.This paper describes the the GEM IPO pricing and distribution methods,combined withthe characteristics of the overall market and companies,to find affecting factors of the GEMIPO pricing from both internal and external par.Based on the theory of BP neural network,the paper builds GEM IPO pricing model,uses financial datas of the listed companies formodel training and testing, to reveal the difference between the GEM and the Main BoardIPO pricing and improve the efficiency of the GEM IPO pricing.Finally,it conducts the modeloptimization analysis, and gives the recommendations of themodel application, in order to improve the easonable and normative of GEM IPO pricing in China.All the paperrelieves the IPO underpricing status of the new shares,to build effective GEM IPO pricingmechanism reference.