Study On Ipo Pricing Model In The China Gem

Theoretical and practical scholars have always been committed to study on how to make initial public offering (IPO) pricing scientifically in the growth enterprise market (GEM) in order to ease the existing high IPO underpricing and "break" phenomenon and improve the capital allocation efficiency. Our paper tests the applicability of the Ohlson model when used to IPO pricing in the GEM. We do researches from the aspect of accounting information reaction time, selection of control variables and the stability of the model aimed at enriching IPO pricing related research and providing research support for IPO pricing in the gem.On the basis of literature review and analyzing the applicability of the Ohlson model, this paper add four variables (firm size, the proportion of public ownership, the growth rate of operating revenue, the growth of net profit and intangible assets ratio) to reflect the characteristics of companies in the GEM considering the characteristics of the GEM and the differences of listed conditions in the main-board market and the GEM. We make empirical tests using all the GEM listed companies during 2010-2013 as samples. Our study finds that as two basic variables in the IPO pricing model, earnings per share and net assets per share’s explanatory power is influenced by the reaction time of accounting information, the Ohlson model does not have stability. The firm size, the proportion of public ownership, the growth rate of operating revenue, the growth of net profit and intangible assets ratio have significant influence on IPO pricing model.This article adds five variables which reflects the characteristics of the GEM companies to the Ohlson pricing model and establishes the expanded Ohlson IPO pricing model. Our study finds that individual variables have significant influence on stock prices and joining five variables in the Ohlson pricing model can improve the goodness-of-fit of the model. The expanded the Ohlson IPO pricing model has passed the empirical test and has good pricing efficiency.