Research On Valuation Of New OTC Market Listed Company

Since the New OTC Market has been established, the listed companies on the New OTC Market has increased to a total number of 10,454 up to February 1st 2017, 9,503 of which are fundamental ones, 951 of which are innovative ones, 1,640 of which focusing on market making transfer, 8,814 of which focusing on agreement transfer, making New OTC Market the global trading venues of largest number. With amounting number of listed companies and its high-speed development, problems accompanied by New OTC Market like valuation have been reflected as well.This paper starts from the characteristics of New OTC Market, the development of enterprises, and the traditional valuation methods, analyzing the existing problems brought by the valuation of listed companies. Different valuation methods have been applied in the paper, while the real option method was chosen in the end to valuate companies on the New OTC Market,showing its difference by empirical test. Unlike other traditional methods, the real option method takes the development of enterprises into account, which makes it the perfect option to valuate companies on the New OTC Market of great potential yet with instabilities. Some appropriate modifications have been made to make the real option method more suitable for Internet companies on the New OTC Market. Due to the rapid development of the New OTC Market, lack of information followed by difficulties in data collection, the paper mainly focuses on the analysis of and comparison between Internet companies on the New OTC Market. The valuations of companies on the New OTC Market are usually less than those on the main board of the stock market, yet rise up to almost the same level of the latter when the real option method is applied.The modified real option method helps better to exploit the real valuation of Internet companies on the New OTC Market while it can be proved to serve as a bargaining tool on the New OTC Market.