Study On The Efficiency Of Initial Public Offering In China

As the rapid development of the capital market of China, more and more companies realized the great advantages of direct financing, and they chose public financing by stock issue. As the listed companies are cornerstones of the stock market, their issue prices do have a direct influence on the willingness of investors, as well as the development of the stock market.The stock market falls into stock issue market and trading market, but most research work concentrates on the validity of the latter one, and ignores the validity of the former one. While the new stock issue is the core of the stock market, the efficiency of price fix will affect the efficiency of the distribution of the resources and the stability of the market. Among a series of major institutional reforms, the reform on IPO is the most important part, although the stock market of China has developed greatly since its foundation in the recent 20 years. This essay mainly focuses on the research of efficiency of price fix of IPO, putting forward two criterions to measure the efficiency of it. The first is the absolute efficiency criterion, which measures the fitting degree of the issue price of the new stock and the closing price of it, and the less difference is in the two prices, the more efficient the price fix of IPO is. The second is the relative efficiency criterion, which is to analyze the relevant degree of the new stock issue price and various factors may affect the price fix of IPO; if the issue price can well generalize the relevant information, the price fix of IPO will be efficient, on the country it is not.Owing to the historical factors, the government administrative intervention inevitably characterizes the Chinese stock market as a product of administration. For a long time, the government has adopted the administrative intervention in stock issue and price fix, which brought some disadvantages, such as the digressiveness in price in primary and secondary market, the huge amount of funds hoarding in the primary market, the ignorance to the inner value of the listed companies, the great change in the market prices, etc.. Therefore, the marketing reform on stock market of our country comes with the tide of the fashion, and the appeal to let market decide the issue price becomes intense.This essay mainly discusses over the efficiency of price fix on IPO, introducing the basic theory and methods on it first, and then divides the different stages of the innovation on price fix, based on the process of the development of the system of price fix on IPO in China. On one hand, we could make use of absolute efficiency criterion through the comparison of marketing under pricing of IPO in different stages by statistic analysis; on the other hand, we could also focus on the use of the relative efficiency criterion, collecting the data of new stocks in Shanghai and Shenzhen stock markets from 2001 to 2010 to set up econometric model, which can verify the influence of reforms on our country's stock issue market on efficiency of IPO price fix through comparative analysis on factors of efficiency of IPO price fix in different stages. The research shows that reform on new stock issue in 2009 achieved good results, which improved the efficiency of IPO price fix, and the reform is on its right way. In the final part, this essay also makes some suggestions on policies of how to improve efficiency of IPO price fix in our country.