Research On Chinese IPO Pricing Mechanism And Pricing Efficiency

This paper comprehensively used the method of normative analysis and empirical analysis to research Chinese IPO pricing mechanism and pricing efficiency. In the aspect of normative analysis, this article systematically combed the IPO audit mechanism、inquiry mechanism and placement in China from1993, and particularly analyzed behaviors of investors and underwriters since registration system reform since2014. In the aspect of empirical analysis, this article chose IPO data between January2005and February2014to verify the influence factor of pricing efficiency in China by using the method of mean test and White Heteroskedasticity-Consistent Standard Errors and Covariance adjusted multiple regression and giving suggestions.This article got the following conclusions:(1) Under the transition of registration system, the number and scope of investors increased sharply, giving a scattered distribution, the highest price ration which underwrites give up fluctuated widely, and the effective quotation width they select is very narrow.(2) Under the placement of registration system, the ratio which underwriters exercised their right to use placement needs to be raised. The pricing efficiency needs to be testified with the time passed by.(3) Between January2005and June2009, the average underpricing rate is extremely high. Affected by double purchase inquiry system, the primary market relative p/e ratio is low. The secondary market noisy investors is significant, underpricing rate is caused by low pricing of primary market and short-sighted optimism of secondary market’s investors.(4) Between June2009to December2012, the average IPO underpricing rate is low but was still significantly greater than zero, the primary market relative p/e ratio is extremely high, underpricing rate is influenced by secondary market’s emotions covering high pricing in the primary market (5)Between January2014and February2014, the primary market relative p/e ratio is relatively low due to some administrative intervention, IPO average underpricing rate is at an intermediate level of the first two stages, but also high, it’s the result of emotional investors and low pricing.