Empirical Study Of IPO Pricing In China’s Growth Enterprise Market

In October 2009,the first batch of 28 companies successfully listed on the GEM,marking China’s initial establishment of a multi-level capital market.The launch of the GEM not only satisfies the financing needs of high-growth small and medium-sized enterprises,but also promotes the effective functioning of resource allocation functions in the GEM.However,the GEM is still an immature emerging market,and its IPO pricing systems have yet to be improved.Moreover,with the implementation of the science and technology innovation board and the registration system,it is both a test and a blow to the stock market,and the reform of the new share issuance system is imminent.The reform of the new share issuance system is a key link in the reform of the securities market.However,whether to implement market-oriented reforms or to continue administrative reforms has been plaguing China’s capital market.In 2014,the China Securities Regulatory Commission began a new round of reform of the new share issuance system,adding administrative interventions to the primary market and the secondary market,such as limiting the price-earnings ratio of new share issuance pricing to 23 times and setting a 44% first-day price limit.The regulatory authorities intended to avoid excessive speculation after the IPO was listed,but in the actual situation it was counterproductive and even worse.In this context,in-depth study of the IPO pricing problem in the GEM,and a reasonable IPO pricing model have theoretical and practical significance for establishing an IPO pricing method that conforms to the Chinese market economy,improving resource allocation efficiency and further promoting value investment.This paper first summarizes the research status of IPO pricing at home and abroad,introduces the reform of China’s new share issuance system,the IPO pricing process of the GEM market,the current pricing method,and the similarities and differences between the main board and the GEM listing conditions,and discusses the advantages and disadvantages of the traditional IPO pricing model.Then,based on the previous research,the factors affecting the IPO pricing of the listed companies on the GEM are analyzed in depth,The market sentiment indicator was introduced into the model,and the weighted interval amplitude of the “new stock and sub-new stock” section within 30 days before the stock sample was issued and the weighted average first-day turnover rate of listed new stocks within 30 days before the stock sample launch were quantified.Finally,this paper selects 21 influencing factors,which can fully reflect the characteristics of IPO pricing in the GEM.Finally,this paper takes 312 GEM listed companies listed in 2014-2018 as a sample,based on the IPO pricing related theory,predecessors’ research and the status quo of China’s GEM market,established the IPO pricing model of the GEM:(1)Due to the multiple collinearity of 21 factors influencing the financial indicators,equity structure,growth index and market sentiment,this paper uses principal component analysis to condense these influencing factors into several principal components.(2)This paper takes the reasonable price of the company’s stock as the explanatory variable,the principal component factor is the explanatory variable,and uses stepwise regression analysis to analyze and constructs a multivariate stepwise regression model to find the company’s operational capability,equity expansion ability and The impact factor indicators of the three aspects of profitability have the greatest impact on the regression model.These indicators basically reflect the operating status and intrinsic value of the listed company,which is consistent with the value investment concept advocated by the current capital market.(3)This paper also uses multiple stepwise regression,the SVR method and the current P/E ratio method to empirically analyze the theoretical model.The results show that the pricing forecast results obtained by the IPO pricing model of the GEM market are more reasonable,which can effectively reduce the IPO premium of the GEM listed companies and reduce the market risk caused by IPO pricing fluctuations,Reduce market speculation,the effective protection of investors’ interests,has good application value to some extent.The application of this model can make up for the shortcomings of the current pricing methods to a certain extent,improve the accuracy of IPO pricing and resource allocation efficiency in the capital market,promote the development of China’s multi-level capital market,and provide some reference for the IPO pricing reform of China’s Growth Enterprise Market.