Research On Corporate Value And Rationality Of IPO Pricing

In recent two to three years, the first-day uncommon performance of IPOs in Ashare market in China has been the focus, which arises questions: whether IPOs pricingis reasonable or not and why there exists a so-high underpricing/overpricing. This paperdevelops its leading research to the above questions.This paper aims to study the rationality of IPOs pricing in A share market ininquiry system from 01/01/2007 to 12/31/2008. According to the corporate value indexsystem built in the paper, corporate internal value is fully judged from profitability,liquidity, capital structure, operation capacity and development capability of thecompany. The paper looks for the relationship between offer price and its influencefactors by using factor analysis and multiple linear regression to judge the rationality ofIPOs pricing. Besides, external factors like IPO volume and market volatility are alsoconsidered.The paper also studies the rationality of IPOs pricing in Hong Kong stockmarket (HK's)to compare the differences between these two markets. The empiricalstudies show that: in A share market, IPOs pricing is more reasonable than that in HK's;there's a severe speculation in aftermarket. In HK's, main corporate internal value can beexplained by IPOs pricing, HK's is mature which has a more powerful adjustment thatcan effectively curb speculation. According to the results, practical suggestions arepromoted to develop A share market steadily and soundly at the end of the article.