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Feasibility Surgery on GEM IPO Price in China

Author: QiJunKai
Tutor: XuLi
School: Sichuan Normal University
Course: Business management
Keywords: GEM initial public offering (IPO) pricing IPO underpricing Enterprise Value
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Type: Master's thesis
Year: 2013
Downloads: 20
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Abstract


The GEM (Growth Enterprise Market) is an important part ofChina’s capital market,is an important channel for high-tech corporate finance,companies listed on the GEM high are scientific and technological content, havegood growth, but the time of establishment is short, operating with the uncertainty ofthe enterprise. GEM barriers to entry relatively low motherboards and small plates,but have more risks.Initial public offering is the most important issue of the companies who wantlisted on the GEM, stock issuance related to the interests of businesses, investors andunderwriters, related to the normal functioning of the GEM resource allocation.GEM in China from October2009, launched on the Shenzhen Stock Exchange,exposed a series of problems in the past three years running process, especially in theIPO pricing. At present, China’s choice for the the GEM IPO pricing method isinconclusive, so the IPO pricing makes sense.The paper first describes the background of the thesis topics, the significance ofthe topic, literature review, research, research methods and innovation of this paperand inadequacies.Then define the concepts related to the IPO, IPO price, IPO underpricing rate,and IPO pricing used four methods and explain IPO underpricing investmentbanking monopoly hypothesis,"winner curse theory" theory are introduced.Subsequently, the introduction of GEM IPO market, mainly including theevolution of the beginning of China’s stock market and IPO pricing, our IPO pricingas well as GEM motherboard and small plates relative to the market characteristicsof study.The fourth is the main part of this paper, the data selected, establish regressionmodels and factor models, analysis of the impact of various factors on IPOunderpricing and IPO pricing, and according to the data given IPO underpricing and pricing analysis.Finally, based on the foregoing analysis, given the conclusions andrecommendations.

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