Research On IPO Pricing Based On Company Value

Either academic circles or practical circles are intimately focusing on the rationality of IPO pricing in the stock market all the time.Marx held the opinion about the theory of market value and market price that a reasonable IPO pricing was based on a company's value,meanwhile,the IPO pricing would be unstable under the influence of supply-demand relationship in the market.The economic consequences regard unreasonable IPO pricing involved not only the benefits of issuing corporations,consignees and investors in the first-class market,but also the benefits of investors in the second-class market.The IPO pricing based on the PE ratio could hardly reflect the true value of a company.Therefore,some researchers began to explore the rationality of IPO pricing from the point of view of market balance,stocks internal value,efficient capital market,option pricing,etc.And they thought that there was a relationship of positive correlation between the financial index information embodying the company's value and IPO pricing.However,there were few documents or masterpieces about the deep research of company's value and IPO pricing which was based on the stakeholder.Therefore,the research of IPO pricing based on the company's value from the point of view of stakeholder had the dual meaning regards conception and reality.This paper adopted the method of combining the normative research with the empirical research to review and comment the related literature at home and abroad.It introduced the theory of market value and market price,company valuation theory,value investing,the efficient market hypothesis,signal transmission theory,behavioral finance theory,stakeholder theory and other related theories.Besides,the paper analyzed and revealed the relationship between the company's value and company's IPO pricing which could be considered as the basis of an IPO pricing model that was based on the company's value with the external comprehensive risk element's pondage factors involved.According to this IPO pricing model,the paper regarded the A stock market in China as an object of the study and selected the companies which made the public issue of A stock firstly in both Shanghai city and Shenzhen city as the sample,and predicted those companies' IPO pricing again.And it compared the coefficient of variation of IPO pricing deviating from the market with the coefficient of variation of practical pricing deviating from the market to reveal that the price calculated by this kind of pricing model was more reasonable.Meanwhile,it also showed that it would be more scientific and more suitable to make a full consideration of the influence on the stock price brought by risk factors concerned by every stakeholder for making sure of IPO pricing.Based on the researching conclusion of this paper,for making IPO pricing become more rational and systematical,it has come up with some suggestions regard related polices that IPO pricing should be persistently in accordance with the company value and it was essential to speed up the cultivation of all kinds of investors in the stock market.In the last,there came out the researching limitations and an orientation for further researching in the future.