A Study On IPO Valuation Model And Under-pricing Of GEM In China

With the continuous development of technology and economy,a large number of high-tech enterprises built up in China.In order to encourage innovating and starting up business,the Growth Enterprise Market has successfully listed in October,2009.However,compared with the main board,the companies listed in GEM are mostly at the early stage of growth,their management and risk pricing are more difficult,and the listed threshold is lower.These factors make these companies not only have high growth abilities,but also have high risks.So studying the IPO pricing and underpricing problems in GEM is significant in both theoretical researches and practical applications.It will improve the system of the GEM,promote the financing efficiency of the small and medium-sized enterprises,and improve the operating environment of Chinese capital market.In this paper,aimed at the companies listed in GEM,it analyzes the financial indicators of the listed companies,and the relationship between enterprise financial indicators and IPO,then it tests the rationality of IPO pricing in our country.Besides,this article also analyzes the influence factors of the closing price on the secondary market to find the main factors that affects the IPO underpricing.This paper respectively uses the IPO and the closing price on the opening day to make regression analysis with the financial indicators.The results show that the fitting degrees haven't reached 60%.That means the gem IPO pricing is not very reasonable,IPO can't reflect the true value of the enterprise very well.Compared with the closing price,IPO can reflect the value of the enterprise better.After the new listings,there are many factors will cause the price fluctuation of new shares on the secondary market that makes a deviation between the listed price and the real value of enterprise.Since the GEM listed,it has experienced a four-wheel issuance system reform,this article simply analyses the IPO underpricing after the four times of IPO reform situation,the results show that the four reforms improve the IPO underpricing in different degree.And based on the investor behavior theory,signal theory,information asymmetry theory,the underwriter reputation theory and prospect theory hypothesis,this paper selects 7 research variables and puts forward relevant assumptions.We find that the waiting time,lottery rate,issuing scale,turnover rate,the market atmosphere and the PE ratio are the important factors affect the underpricing.That shows that information asymmetry,investors behavior and market environment have a significant influence on IPO underpricing phenomenon,and in the market index analysis,we find the index in week is the most suitable.Finally according to the conclusion,we put forward relevant policy suggestions.