The Analysis of Factors Affecting IPO Premium

DOI

10.2991/978-94-6463-874-5_19How to use a DOI?

Keywords

IPO pricing; IPO premium; information asymmetry; DCF valuation; fixed price method

Abstract

The study of initial public offering (IPO) pricing and premium is of significant importance, as improper pricing may lead to insufficient financing for companies or the formation of market bubbles, adversely affecting economic stability. This paper examines the impact of internal company factors, such as financial performance and corporate governance, as well as external market environment factors, including investor sentiment and macroeconomic conditions, on IPO pricing. Additionally, it explores the role of information asymmetry theory in explaining IPO premiums, highlighting how unequal information distribution between issuers and investors can lead to mispricing. The study provides a detailed analysis of the factors influencing IPO premiums and compares two common pricing methods: the discounted cash flow (DCF) model and the fixed price method, discussing their respective advantages and limitations. Furthermore, a multiple linear regression model is constructed using standardized data to assess the impact of eight key independent variables, such as issue price, first-day trading volume, and market volatility, on the first-day premium rate. The findings suggest that regulatory authorities should mandate the disclosure of institutional quotation distributions and enhance oversight to mitigate information asymmetry. Meanwhile, companies should adopt rational valuation practices based on industry benchmarks and improve transparency by disclosing project progress to foster market trust and ensure a fair pricing process.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Zitian Ye
PY  - 2025
DA  - 2025/11/03
TI  - The Analysis of Factors Affecting IPO Premium
BT  - Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025)
PB  - Atlantis Press
SP  - 149
EP  - 158
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-874-5_19
DO  - 10.2991/978-94-6463-874-5_19
ID  - Ye2025
ER  -