The Empirical Research On IPO Pricing Mechanism And Residual Income Valuation Model In China A-Share Market

Along with the reform and restart of IPOs in China A-share market in 2014,the new stocks issued enjoyed a feast of skyrocketing.This research,which based on Residual Income Valuation Model,is designed to analyze the valuation of newly issued stocks under current IPO pricing mechanism from January,2014 to June,2015.Through the comparison between the results provided by the model and the actual issue prices,we examine the driving factors leading to their differences,and the sensitivity of the variables used in the model,and then analyze the rationality of IPO pricing mechanism.In the light of the empirical analysis,this research conclusion is as follows:1.There is underpricing situation in an issue price,because the issue prices are below the valuation run by the RIM model.2.Through the spread research on the issue price and RIM valuation,we find that there is a significant linear relationship between the selected financial indicators and the spread which is between the issue prices and the RIM valuation.3.Based on the regression analysis,the fluctuation of stock prices can be explained better by the RIM than the actual issue prices.And the stock prices deviate from the RIM outputs less than the issue prices in a period of time after the stock issuance.