The IPO Pricing in China’s Stock Market and Comparison with it in the International Market
Abstract:
In this thesis, firstly, I will overview the theories of IPO pricing, first from the Pricing Model aspect and then from the pricing mechanism aspect. Then, I will discuss practice of IPO pricing in China and the factors which affected it. Moreover, I will compare the result of IPO pricing between in Chinese market and in developed market by their first-day stock price performance. After that, I will discuss the influence and the factors of IPO underpricing. Finally, I will present a brief discussion about the ways to improve Chinese IPO Pricing.
Concerning my research methodology, I will get my results, first by reviewing and analyzing existing literature, documents, essays related to IPO pricing and current regulation of China’s stock market. Then I will benchmark the IPO performance in China with it in the developed market by two means. First, I will compare existed data. However, regarding the lack study on underpricing phenomenon after 2005 reform, I will take a sample of all 194 IPOs issued during 2007 and 2008 in Shanghai Stock Exchange, calculate the first day and long term performance and compare it with, China and second by discussing the example of a Chinese company’s IPO Pricing.
Key words: IPO pricing methods, China, China Petro, developed markets