Research On Prices Of Equity-Financing Of Urban Commercial Banks

There are a large number of Urban Commercial Banks (UCBs), as a special group of China banking and their sharing in banking is increasing year by year. They gradually improve themselves with the development of the cities, having held its own space on the local finance stage. Some of them have gained local market share to25%, ahead of other banks.At birth, the UCBs are facing multi difficulties, liking the high non-performing loan ratio, invalid corporate governance and etc. What’s more, nearly half of them were running in the red. In the environment of facing the new situation in the WTO, new regulatory authorities funding and positive macroeconomic trends, UCBs reformed following the big four banks and the shareholding commercial banks. Almost all of the UCBs supported by local governments, re-created, restructured, established corporation and attracted equity-investments from2003to2007. A few of them took on strategic investors, to some extent, spawning considerable effect. The majority introduced local state-owned enterprises, private companies, and extraneous corporations, not only meeting the regulatory and the need from self-development in terms of capital, but also playing a positive role in scatter ownership structure to some degree and improving the effectiveness of corporate governance. The UCBs have being on track and continued financing have become normalcy-equity and debt financing alternately turn into the most important financing funding. In addition, external factors such as market valuation of listed banking and wildly exaggerated expectation obviously affected investment purposes and price.. Like the big four banks and other commercial banks, how to determine a fair price also is a primary headache because that increasing capital will involve assignment and diluting equity of state-owned shares:if the share were undervalued, it will be questioned; if overvalued, it will be unattractive. As the result, the method of net asset per share plus premium in the State-owned enterprise reform went into the mainstream and the most reference in company valuations of UCBs’non-tradable or unlisted shares. Pricing is more and more complex because UCBs are continuous internal diverse, with premium effected by many factors, hence the theoretical and practical significance of researching those factors. The paper analyzes the relationship between scale and price (or cost) in various capital supplementation channels, such as accumulating profit, increasing capital, financing by public listing and issuing secondary bond, based on research the reasons of UCBs increasing capital supplementation and the historical statistical data. Different investors’ purposes are diverse, with the prices the investors offering different, so that the results from capital supplementations fell into many distinct groups. Therefore, the article divides investors into five groups by those aims.On the basis of reviewing the literatures about on the initial public offer price and Influencing factors, investment valuation of single bank, we research influence of changes in ownership structure, shareholding structure, and corporate governance. Comparing the differences between the investment aims and influences, we use multiple regressions between price and explanatory variables by collecting sample data and will get the application on Game theory so that the paper would discover the impact of those factors on price and look for ways to improve self-valuation.